Markets continued the year-end rally

Dow climbed another 159 with selling into the close, advancers over decliners better than 3-1 & NAZ was up 81.  The MLP index added 1+ to the 255s & the REIT index went up 3+ to the 396s.  Junk bond funds remained in demand & Treasuries had limited buying which slightly reduced yields.  Oil rose 1+ to the 75s & gold gained 5 to 2074 (more on both below).

AMJ (Alerian MLP Index tracking fund)

Israel's gov agreed to give Intel (INTC), a Dow stock, a $3.2B grant for a new $25B chip plant it plans to build in southern Israel, both sides said, in what is the largest investment ever by a company in Israel.  The news comes as Israel remains locked in a war with Palestinian militant group Hamas in the wake of the Oct 7 Hamas attack on Israel & is a big show of support by a major US company & a generous offer by Israel's gov at a time when the US has increased pressure on Israel to take further steps to minimize civilian harm in Gaza.  The expansion plan for its Kiryat Gat site which is 26 miles from Hamas-controlled Gaza is an “important part of Intel’s efforts to foster a more resilient global supply chain, alongside the company’s ongoing and planned manufacturing investments in Europe and the United States,” INTC said.  Under CEO Pat Gelsinger, INTC has invested Bs in building factories across 3 continents to restore its dominance in chip-making & better compete with its rivals.  The new Israeli plant is the latest investment by the US chipmaker in recent years.  Intel plans to spend more than €30 ($33B) to develop 2 chip-making plants in Magdeburg, as part of a multi-billion-dollar investment drive across Europe to build chip capacity.  Berlin has pledged big subsidies to attract Germany's biggest-ever foreign investment.  Israel's finance & economy ministries said INTC's investment, especially in this period & in light of the global competition to attract significant investments in the field of chips, is a significant expression of confidence in Israel's economy.  They added the investment has direct fiscal benefits for Israel that will be significantly higher than the state's grant.  “This investment, at a time when Israel wages war against utter wickedness, a war in which good must defeat evil, is an investment in the right and righteous values that spell progress for humanity,” Finance Minister Bezalel Smotrich said.  INTC stock rose 2.50 (5%).

Israel grants Intel $3.2 billion for new $25 billion chip plant, biggest ever company investment in country

Bristol Myers Squib (BMY) will buy RayzeBio (RYZB) for about $4.1B to bolster its cancer drug business, marking the 2nd multi-billion dollar deal struck by the drugmaker in less than a week.  BMY had announced a $14B buyout of schizophrenia drug developer Karuna Therapeutics (KRTX)  on Fri, nearly 2 months after newly-appointed CEO Chris Boerner officially took the helm at the drugmaker.  With the RYZB deal, Bristol gains a late-stage targeted radiopharma therapy, RYZ101, that acts like a ‘canon ball’ to kill cancer cells by delivering radioactive particles to the tumorous tissue or tumor-associated cells.  BMY also gains access to RYZB's manufacturing site in Indianapolis, Indiana.  Bristol will pay $62.50 for each share of RYZB in cash, representing a premium of 104% to the stock's last close.  “There’s still a lot of...firepower in the large pharma balance sheets and companies that have drugs that are going to lose exclusivity,” said Phipps, referring to a spree of acquisitions in the biotech sector in recent weeks.  BMY stock fell 82¢ & RYBZ stock jumped 30.93 to 61.49 on the buyout news.

Bristol Myers to buy RayzeBio for $4.1 billion in targeted cancer therapy push

The US military carried out retaliatory air strikes yesterday in Iraq after a one-way drone attack earlier in the day by Iran-aligned militants that left one US service member in critical condition & wounded 2 other US personnel, officials said.  The back-&-forth clash was the latest demonstration of how the Israel-Hamas war is rippling across the Middle East, creating turmoil that has turned US troops at bases in Iraq & Syria into targets.  Iran-aligned groups in Iraq & Syria oppose Israel's campaign in Gaza & hold the US partly responsible.  The US military carried out the strikes in Iraq, likely killing “a number of Kataib Hezbollah militants” & destroying multiple facilities used by the group, the US military said.  These strikes are intended to hold accountable those elements directly responsible for attacks on coalition forces in Iraq & Syria & degrade their ability to continue attacks.  “We will always protect our forces,” said General Michael Erik Kurilla, head of US Central Command.  A US base in Iraq’s Erbil that houses US forces came under attack from a one-way drone earlier yesterday, leading to the latest US casualties.  The base has been repeatedly targeted.  Reuters reported on another significant drone attack in Oct on the barracks at the Erbil base on Oct 26, which penetrated US air defenses but failed to detonate.

U.S. retaliates in Iraq after three U.S. troops wounded in attack

Gold ticked higher as the final week of the year got under way, with traders looking ahead to interest rate cuts from the Federal Reserve in 2024 & a weaker US currency.  Bullion is trading near a record high, heading for its first annual increase in 3 years, as data showing US price pressures easing reinforces expectations for multiple rate cuts in 2024.  A report last week showed the Fed's preferred gauge of underlying inflation barely rose last month & by one measure even trailed policymakers' 2% target.  Swaps markets are now pricing in a more than 80% chance of a cut by Mar, which would be bullish for non-interest bearing assets like gold, though some central bank officials have pushed back on the prospect of early easing.  Gold rose 0.2% to $2057 an ounce.

Gold Inches Higher on Expectations for Fed Rate Cuts Next Year

Crude oil futures settled at their highest level this month in thin holiday trade as risks of shipping disruptions in the Red Sea because of Houthi rebel attacks remain supportive of prices.  India moved warships into the Arabian Sea as a deterrent after an attack last week on a ship off the Indian coast & shipping giant Maersk said yesterday it plans to resume shipments thru the Red Sea "as soon as operationally possible" after a US-led force was deployed to protect vessels.  WTI for Feb settles up 2.7% at $75.57 a barrel after reaching $76.18 intraday & Feb Brent rises 2.5% to $81.07 a barrel versus an intraday high of $81.72.

Oil Futures Settle Higher as Red Sea Shipping Risks Remain

The bulls are in command of the stock market & want to take the popular indices higher to close the year at record levels.  The war in the MidEast will continue to be a major driver for stocks & that brings a lot of unknowns.

Dow Jones Industrials