Markets slide lower on the last trading day in 2024

Dow finished in daily trade down 29 (near session lows), advancers over decliners better than 3-2 & NAZ dropped 175 today.  The MLP index was up 1+ to the 294s & the REIT index gained 3 to the 398s.  Junk bond funds fluctuated & Treasuries had a little selling which took yields modestly higher.  Oil rose fractionally to the high 71s (but still in its sideways trading zone) & gold finished the year up 22 to 2640.

Dow Jones Industrials 

There’s good news in the housing market to close out 2024: there's a lot more supply.  The bad news: a lot of that supply is stale, sitting unsold for much longer than usual.  Active listings in Nov were 12.1% higher than they were in Nov 2023 & hit the highest level since 2020, according to a new report from Redfin.  More than ½ of those homes (54.5%), however, had sat on the market for at least 60 days without going under a contract of sale.  That's the highest share for any Nov since 2019 & is up nearly 50% from the year before.  The typical home that did go under contract did so in 43 days, the slowest Nov pace since 2019.  “A lot of listings on the market are either stale or uninhabitable. There’s a lot of inventory, but it doesn’t feel like enough,” said Redfin agent Meme Loggins, who was quoted in the report.  “I explain to sellers that their house will sit on the market if it’s not fairly priced. Homes that are priced well and in good condition are flying off the market in three to five days, but homes that are overpriced can sit for over three months.”  Mortgage rates shot over 7% in Oct & have mostly stayed there thru the end of the year, according to Mortgage News Daily.   Home prices also continue to rise.  The latest monthly price report from S&P CoreLogic Case-Shiller showed prices nationally up 3.6% in Oct compared with the same month a year earlier.  “With the latest data covering the period prior to the election, our national index has shown continued improvement,” said Brian Luke, head of commodities, real & digital assets at S&P Dow Jones Indices.  “Removing the political uncertainly risk has led to an equity market rally; it will be telling should the similar sentiment occur among homeowners.”  Pending home sales, which is a measure of signed contracts to purchase existing homes, rose in November both monthly & annually to the highest level in nearly 2 years, according to the National Association of Realtors (NAR).  They were, however, coming off a very slow base.  The Realtors claim interest rates are now at a new normal.  “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” said Lawrence Yun, NAR's chief economist.  “Mortgage rates have averaged above 6% for the past 24 months. Buyers are no longer waiting for or expecting mortgage rates to fall substantially. Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”  The slower selling pace, however, doesn't bode well for the new year, especially with interest rates remaining elevated.  There is still demand, but renters are remaining renters longer, according to another Redfin report, due not only to higher home prices but higher prices for brokers & movers.

The housing market is heading into 2025 with a worrying supply trend

Despite high borrowing costs, home prices in major US cities continued to climb in 2024, except for a handful of metros in Texas & Florida, where prices bucked the trend and declined.  Out of the largest 50 metros, only 4 major cities recorded year-over-year price declines as of Nov 2024, according to listings data from the online broker Redfin.  A look at which cities had price drops & shows how much they fell, based on the change in median home prices.

• Austin, Texas: -3.7%
• Tampa, Florida: -3.5%
• San Antonio, Texas: -3.0%
• Fort Lauderdale, Florida: -1.6%

With the steepest drop in home prices, Austin, Texas, has become a leading example of pandemic boomtowns facing a sharp reversal.  After home prices soared to a peak of $667K in 2022, they have since dropped to $548K, according to Redfin's latest data.  While still higher than the national median of $430K, the drop marks a significant shift from the city's pandemic-era growth.  From 2020 to 2022, Americans flocked to warmer climates and more affordable cities like Austin, driving up demand for housing in Texas & Florida.  This surge in interest coincided with a construction boom, bringing housing supply back to pre-pandemic levels in both states.  Now, with migration slowing & new homes entering the market, major cities in Texas & Florida are seeing slower price growth compared to the national average.  While some cities in these states posted price declines, others, such as Orlando & West Palm Beach in Florida, along with Fort Worth in Texas, recorded only modest gains of under 2%, far below the national average of 5.4%.  Rising levels of “stale inventory” — homes sitting on the market for over 60 days are weighing on prices.  In Nov, more than 60% of listings in Austin, Fort Lauderdale & San Antonio remained unsold for two months or longer, among the highest shares in the country.  Florida's housing market faces other challenges as well.  Natural disasters & rising construction costs are driving up insurance premiums, while surging HOA fees are also making homes increasingly unaffordable for buyers.  These metros stand in contrast to much of the country, where tight inventory is expected to push home prices higher.

Home prices rose in major U.S. cities last year—except these 4 in Texas and Florida

For all the exuberance about Tesla (TSLA)  benefiting from Donald Trump's return to the White House, trader's aren't so sure the carmaker can avoid its first annual sales decline in over a decade.  Analysts are estimating the company may deliver around 510K vehicles in the final 3 months of the year.  That would set a new quarterly record for TSLA, but the company would need to sell about 4600 more cars to make good on its forecast for slight growth in 2024. TSLA has a lot riding on the production & delivery figures it's expected to report on Jan 2.  While investors have been betting Musk's emergence as the marquee donor to President-elect Trump will pay dividends for his companies, an annual sales dip could lead to some 2nd-guessing.  Trump's policy prescriptions are far from a slam dunk for TSLA.  While a federal framework for autonomous vehicle deployment is cause for optimism, it's not clear the company’s technology is ready.  Trump's advisers also are recommending that he repeal electric-vehicle subsidies & roll back fuel-economy & tailpipe-pollution regulations that generate significant revenue for TSLA.   Musk has maintained throughout the year that TSLA is between 2 “growth waves” & repeatedly predicted that autonomy will lead to a next leg of expansion. The first touched off when the company began rolling out its most affordable EV, the Model 3 sedan & followed that up with the smash-hit Model Y sport utility vehicle.  Whether TSLA manages to eke out any growth or not in 2024, the company lost significant momentum in the midst of a broader slowdown in the global EV market.  TSLA stock fell 1.00 today.

Tesla stock surge faces a hurdle: Potential annual sales drop

Gold had its biggest gain in 14 years, with a 27% advance fueled by US monetary easing, sustained geopolitical risks & a wave of purchases by central banks.  While bullion has ticked lower since Donald Trump's sweeping victory in Nov's US presidential election, its gains over 2024 still outstrip most other commodities.  Base metals have had a mixed year, while iron ore has tumbled & lithium's woes have deepened.  The varied performances over 2024 highlight the absence of a single, overriding driver that's steered the complex's fortunes, while also putting the spotlight on how metals, both base& precious, may fare next year.  For 2025, investors are focused on uncertainty around US monetary policy, potential frictions from Trump's presidency & China's efforts to revive growth.  Gold's strong gains this year, which have seen the precious metal set a succession of record highs, may signal a possible shift in the market's dynamics given they have come despite a stronger $ & rising real Treasury yields, both typically headwinds.  The precious metal has been “as remarkable as it’s been relentless, making it my biggest market surprise of 2024. 

Gold Heads for Biggest Gain Since 2010 in Mixed Year for Metals

Oil prices were on track to end 2024 with a 2nd consecutive year of losses, but were steady on the day as data showing an expansion in Chinese manufacturing was balanced by Nigeria targeting higher output next year.  Brent crude futures fell by 7¢ to $73.92 a barrel & US West Texas Intermediate (WTI) crude lost 4¢ to $70.95 a barrel.  At those levels, Brent was down around 4% from its final 2023 close price of $77.04, while WTI was down around 1% from where it settled on Dec 29 last year at $71.65.  In Sep, Brent futures closed below $70 a barrel for the first time since Dec 2021, while their highest closing price of 2024 at $91.17 was also the lowest since 2021, as the impacts of a post-pandemic rebound in demand & price shocks from Russia's 2022 invasion of Ukraine began to fade.  Oil prices are likely to be constrained near $70 a barrel in 2025 as weak demand from China & rising global supplies are expected to cast a shadow on OPEC+-led efforts to shore up the market.  A weaker demand outlook in China in particular forced both the Organization of Petroleum Exporting Countries (OPEC) & the Intl Energy Agency (IEA) to cut their oil demand growth expectations for 2024 & 2025.  With non-OPEC supply also set to rise, the IEA sees the oil market going into 2025 in a state of surplus, even after OPEC and its allies delayed their plan to start raising output until Apr 2025 against a backdrop of falling prices.  Investors will also be watching the Federal Reserve's rate cut outlook for 2025 after central bank policymakers earlier this month projected a slower path due to stubbornly high inflation.  Lower interest rates generally incentivize borrowing and fuel growth, which in turn is expected to boost oil demand.  Markets are also gearing up for Pres Trump's policies around looser regulation, tax cuts, tariff hikes & tighter immigration, as well as potential geopolitical shifts from Trump's calls for an immediate ceasefire in the Russia-Ukraine war, as well as the possible re-imposition of the so-called "maximum pressure" policy towards Iran.  Prices were supported today by data showing China's manufacturing activity expanded for a 3rd straight month in Dec but at a slower pace, suggesting a blitz of fresh stimulus is helping to support the world's 2nd-largest economy.

Oil prices set for second annual loss in a row, stable day on day

Stocks slipped to conclude trading in 2024, extending an uncharacteristic limp to the finish after a roaring year of trading.  Despite the sour final stretch, NAZ Composite was up almost 30% & Dow posted a more modest 13% gain for the year.  The S&P's annual gain roughly matches 2023's performance, logging the highest consecutive back-to-back annual gain in nearly 30 years.  Overall, the good times have stalled in the last week, as markets have given up some of their big gains, all the more uncharacteristic considering the typical Santa Claus rally that marks the end of the year.  Next year should have some exciting times.

Markets ease higher today after stong advances during 204

Dow was up 31, advancers over decliners about 3-1 & NAZ gave back 50.  The MLP index crawled up 1+ to the 294s & the REIT index added 2+ to the 398s.  Junk bond funds inched higher & Treasuries were flattish, keeping yields about even (more below).  Oil rose but stayed in the 71s & gold gained 19 to 2637.

Dow Jones Industrials

Experts are sounding the alarm over a new report indicating credit card loan defaults soared this year, warning the dam is about to break on Americans' record-high consumer debt.  During the first 9 months of 2024, lenders wrote off more than $46B in seriously delinquent credit card loans, according to a report from the Financial Times citing data analyzed by BankRegData.  That's an increase of 50% from the first 3 qtrs of 2023 & the highest since 2010.  "High-income households are fine, but the bottom third of US consumers are tapped out," Mark Zandi, head of Moody's Analytics, said.  "Their savings rate right now is zero."  Pointing to the findings, The Kobeissi Letter declared, "The credit card debt bubble is popping."  The New York Federal Reserve reported last month that Americans' credit card debt hit another record high in Sep, climbing to $1.17T during the 3rd qtr, marking the highest level on record in Fed data dating back to 2003.  The report showed total household debt also climbed to a new high of $17.94T, along with balances on mortgages ($12.6T), auto loans ($1.6T) & student loan balances ($1.6T).  New York Fed researchers discussed the growth in debt balances across the board, the persistent & "concerning" growth in auto loan & credit card delinquencies, & how stresses & high delinquency rates are concentrated among younger borrowers.  "We've seen notably elevated flows into delinquency, particularly for credit cards as well as auto loans during the past few years," one researcher said.  "This is something that we have been pointing to as a reason for concern — something to keep an eye on."  They pointed to the rise in payments consumers are making on credit cards & auto loans, which is attributed partly to inflation & also because of higher interest rates.

US credit card defaults soar to highest level in 14 years

Treasury yields were lower, in the final trading day of the year, but the benchmark 10-year yield is still on track to end the year solidly higher.  The yield on the 10-year Treasury was down by 2 basis points at 4.527% & the 2-year Treasury yield was last down 3 basis points at 4.225%.  Yields & prices move in opposite directions& 1 basis point is equivalent to 0.01%.  The fall in yields extended yesterday's declines, which came after the 10-year Treasury yield hit a multimonth high last week after rising distinctly across the last 3 months of the year.  Those swings are a fitting end to a choppy year in the bond market. The 10-year Treasury yield began the year below 3.9% before jumping to 4.7% in the spring.  It then retreated to below 3.7% in Sep before bouncing higher again.  Conflicting economic data & changing rate outlooks have fueled those swings.  The US economy has proven to be stronger than many economists expected at the beginning of the year, but inflation is still above 2%.  The Federal Reserve did begin cutting rates in Sep, but traders have now dialed back expectations of further reductions in 2025.  The rate cuts have led to lower short-term yields, but long-term yields are still higher on the year.  This means that the yield curve is no longer inverted, but the moves have hurt many investors' performance & is keeping mortgage rates elevated.  Many funds focused on long-term debt will finish 2024 with negative returns.

Treasury yields pull back on last trading day of 2024

It was a big year for silicon in Silicon Valley, but a brutal 1 for the company most responsible for the area's moniker.  Intel (INTC), a Dow stock & the 56-year-old chipmaker co-founded by industry pioneers Gordon Moore & Robert Noyce, had its worst year since going public in 1971, losing 61% of its value.  The opposite story unfolded at Broadcom (AVGO), the chip conglomerate run by CEO Hock Tan & headquartered in Palo Alto, California.  AVGO's stock price soared 111% in 2024 as of yesterday, its best performance ever.  The current company is the product of a 2015 acquisition by Avago, which went public in 2009.  The driving force behind the diverging narratives was artificial intelligence.  AVGO rode the AI train, while INTC largely missed it.  The changing fortunes of the 2 chipmakers underscores the fleeting nature of leadership in the tech industry & how a few key decisions can result in hundreds of Bs of $s in market cap shifts.  AVGO develops custom chips for Google (GOOG) other huge cloud companies.  It also makes essential networking gear that large server clusters need to tie thousands of AI chips together.  INTC was up 27¢ today & AVGO fell 1.49.

Silicon Valley’s turn of fortune: Intel has worst year ever, while Broadcom enjoys record gain

Stocks slipped, continuing an uncharacteristic limp to the finish after a roaring year of trading.  Despite the sour final stretch, the Dow has posted a modest 13% gain & the tech-heavy NAZ is up almost 30%.  Meanwhile, the Federal Reserve made its first interest rate cut in 4 years & Pres-elect Donald Trump's impending return to the White House drove stocks higher in the last 2 months.

Markets drift lower in thin trading

Dow slid back 418 but finished off early lows, decliners over advancers 3-2 & NAZ declined 235.  The MLP index edged up to the 293s & the REIT index fell 1 to the 396s.  Junk bond funds were mixed & Treasuries continued to be purchased which lowered yields from recently high levels (more below).  Oil was up slightly but finished below 71 & gold was of 2 to 2619 (more on both below).

Dow Jones Industrials 

The New York Stock Exchange (NYSE) & the NAZ will participate in the national day of mourning for the late Pres Jimmy Carter on Jan 9 by closing their markets.  The NYSE said that the NYSE, NYSE American Equities, NYSE American Options, NYSE Arca Equities, NYSE Arca Options, NYSE Chicago & NYSE National will not operate on Jan 9, in honor of the former pres.  All of NAZ's US equities & options markets will similarly close that day, NAZ said.  Carter, who served in the White House from 1977-1981, died yesterday.  He was 100 years old.  "Jimmy Carter, with humble roots as a farmer and family man, devoted his life to public service and defending our freedom. During his noteworthy post-presidential life, President Carter left an enduring legacy of humanitarianism," NYSE Group Pres Lynn Martin said.  "The NYSE will respectfully honor Pres Carter's lifetime of service to our nation by closing our markets on the National Day of Mourning."  "We mourn the loss of President Carter and will be closing our U.S. markets during the National Day of Mourning to celebrate his life and honor his legacy," NAZ Pres Tal Cohen said.  "On behalf of Nasdaq, we extend our deepest condolences to the Carter Family."  The national day of mourning for Carter was announced by Pres Biden, who at the same time instructed public buildings & the military to lower their flags to half-staff for 30 days.

NYSE, Nasdaq to close Jan. 9 for national day of mourning following death of Jimmy Carter

Treasury yields slipped in 1 of the final trading days of the year got underway.  The yield on the 10-year Treasury was down by about 7 basis points at 4.547%, trading just below multimonth highs recorded last week & the 2-year Treasury yield was last trading at 4.254% after dipping by about 7 basis points.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  Investors focused on the end of the year & qtr, & considered the outlook for the US economy & the path ahead for monetary policy from the Federal Reserve in 2025.  The Fed indicated that fewer interest rate cuts were on the horizon when it met earlier this month.  Policymakers will make their first rate decision of 2025 in late Jan.  Long-term interest rates have risen in recent months, despite the Fed's cuts, as traders dial back expectations for further central bank action next year.  Data released last week showed that weekly initial jobless claims for the week ending Dec 21 fell slightly & came in below expectations, while continuing claims for the week ending Dec 14 jumped to the highest level since Nov 2021.

Treasury yields dip as final trading week of 2024 kicks off

Housing contract activity picked up again in Nov as buyers shrugged off elevated mortgage rates & took advantage of higher inventory levels.  The Pending Home Sales Index, which tracks contract signings on existing homes, rose 2.2% from Oct to 79, its highest reading since Feb 2023, according to the National Association of Realtors (NAR).  An index level of 100 is equal to contract activity in 2001.  It's the 4th straight month of gains.  Pending home sales are up 6.9% compared to Nov 2023.  “Consumers appeared to have recalibrated expectations regarding mortgage rates and are taking advantage of more available inventory,” Lawrence Yun, NAR's chief economist, said.  Last month, housing contract activity rose in all regions of the country except for the Northeast.  The South saw the largest month-over-month increase, improving 5.2% from Oct & 8.5% from a year ago.  All parts of the country saw more contract activity compared with Nov 2023, led by an 11.8% jump in the West.  Although the market is picking up, 2024 is on track to be 1 of the slowest years for existing home sales in decades.  High prices, coupled with elevated mortgage rates, have kept many potential buyers & sellers sidelined.  Still, after 2 years of mortgage rates above 6%, Yun said buyers may be adjusting.  “Buyers are no longer waiting for or expecting mortgage rates to fall substantially,” the statement said.  “Furthermore, buyers are in a better position to negotiate as the market shifts away from a seller’s market.”  The NAR expects 4.5M existing home sales next year.  As of Nov, existing home sales were at a seasonally adjusted annual rate of 4.15M.

Pending sales of existing homes rise to highest level since Feb. 2023

Gold prices dipped in thin trading as traders awaited fresh catalysts, including next week's US economic data that could influence the Federal Reserve's 2025 interest-rate outlook, as well as policies from incoming Pres Trump.  Spot gold fell 0.7% to $2602 per ounce & US gold futures were down 0.7% at $2615.  The holiday with thin trade & perhaps some squaring of the books before year-end could be at play.  Geopolitical tensions are expected to remain high into next year, with central banks continuing to buy gold, while the US debt situation is likely to worsen & the deficit to grow under the Trump administration, fueling ongoing safe-haven demand for the metal.  Gold has surged nearly 27% this year, reaching a record high of $2790 on Oct 31, as investors sought the yellow metal amid geopolitical uncertainty & US rate cuts.

Gold prices dip as markets await fresh catalysts

Oil slipped in quiet end-of-year trading, as the market focused on the outlook for 2025 while monitoring Middle East developments.  West Texas Intermediate traded near $70 a barrel after rising 1.6% last week & Brent was below $74.  There are widespread expectations that the market will be oversupplied next year, which is likely to make it harder for OPEC & its allies to revive idled production.  Oil is heading for a modest loss this year, with trading confined to a narrow range since mid-Oct.  The market has been buffeted by bearish & bullish signals, including persistent hostilities in the Middle East.  Traders will be also watching for any fallout from a Trump administration.  WTI for Feb was lower at $70.41 a barrel & Brent for Feb, which expires tomorrow, dipped 0.5% to $73.80 a barrel.

Oil Dips in Thin Trading as Traders Focus on 2025 Outlook

Stocks fell, with the woes of the 3 major indices continuing in the final week of the year as an otherwise strong 2024 comes to a close.  But interest in Treasuries brought buying in the 10-year Treasury & its yield retreated from a 7-month high to hover near 4.55%.  The highly anticipated "Santa Claus" rally, which is statistically 1 of the most consistent 7-day positive stretches of the year for the S&P 500, has flopped thus far.

Markets are lower in the final trading week of 2024

Dow dropped 451, decliners over advancers about 3-1 & NAZ sank 244.  The MLP index wobbled in the 292s & the REIT index retreated 3+ to the 393s.  Junk bond funds inched higher & Treasuries were purchased, taking yields lower from 7 month highs.  Oil was higher, going over 71, & gold declined 17 to 2614.

Dow Jones Industrials

Google (GOOGL) CEO Sundar Pichai told employees last week that “the stakes are high” for 2025, as the company faces increased competition & regulatory hurdles & contends with rapid advancements in artificial intelligence.  At a 2025 strategy meeting on Dec 18, Pichai & other GOOGL leaders, donning ugly holiday sweaters, hyped up the coming year, most notably as it pertains to what's coming in AI.  “I think 2025 will be critical,” Pichai said.  “I think it’s really important we internalize the urgency of this moment, and need to move faster as a company. The stakes are high. These are disruptive moments. In 2025, we need to be relentlessly focused on unlocking the benefits of this technology and solve real user problems.”  Some employees attended the meeting in person at GOOGL's headquarters in Mountain View, California & others tuned in virtually.  His comments come after a year packed with some of the most intense pressure GOOGL has experienced since going public 2 decades ago.  While areas like search ads & cloud produced strong revenue growth, competition picked up in GOOG's core markets, & the company faced internal challenges including culture clashes & concerns about Pichai's vision for the future.  Additionally, regulation is now heavier than ever.  In Aug, a federal judge ruled that GOOGL illegally holds a monopoly in the search market.  The Justice Dept in Nov asked that GOOGL be forced to divest its Chrome internet browser unit.  In a separate case, the DOJ accused the company of illegally dominating online ad technology.  That trial closed in Sep & awaits a judge ruling.  GOOGL stock fell 1.43.

Google CEO Pichai tells employees to gear up for big 2025: ‘The stakes are high’

Accident investigators are trying to figure out what caused a Jeju Air flight to belly land without its landing gear down at Muan Intl Airport in South Korea, killing all but 2 of the 181 people on board as it burst into flames in the nation's worst air disaster in decades.  South Korea's acting Pres Choi Sang-mok ordered an emergency inspection of the country's Boeing (BA), a Dow stock 737-800s, the type of plane used on the the fatal Jeju Air Flight 7C2216.  The BA 737-800 is one of the world's most commonly used airplanes & it has a strong safety record.  It predates the BA 737 Max, the type that was involved in 2 fatal crashes in 2018 & 2019 that killed all 346 people on board those flights.  The 737 Max was grounded for almost 2 years.  There are nearly 4400 of the 737-800s operated around the world.  That means the model makes up about 17% of the world's in-service commercial passenger jet fleet.  The average age of the world's 737-800 fleet is 13 years old & the last of the series of planes were delivered about 5 years ago.  Jeju Air took delivery of the plane which was involved in this weekend's crash in 2017.  It was previously operated by European discount carrier Ryanair, according to Flightradar24.  The plane involved in the crash was about 15 years old.  Aerospace experts say it’s unlikely that investigators will find a design problem with the long-flying aircraft.  “The idea that they’ll find a design flaw at this point is borderline inconceivable,” said Richard Aboulafia, managing director at AeroDynamic Advisory, an aerospace consulting firm.  BA stock fell 3.50.

Boeing 737-800, the model that crashed in South Korea, is one of the world’s most popular aircraft

US retail closures have reached the highest level since the COVID-19 pandemic, according to recent estimates.  As of Nov 8, retailers have announced 6481 store closures this year, an increase of 336 closures in just the past week, according to the latest data from Coresight Research.  The majority of these closures were driven by American Freight, which is shutting all 329 of its locations as part of its parent company's bankruptcy proceedings.  Coresight also recorded 5363 store openings this year as of Nov 8, including 30 openings last week.  However, closures are still outpacing openings, a shift from the trend of the past 2 years, John Mercer, Coresight's head of global research, said.  In 2021, closures exceeded openings by only 180 stores & in 2020, the gap was much larger, with closures outpacing openings by nearly 6000 stores.  Additionally, Coresight tracked 43 retail bankruptcies this year, a sharp increase from the 25 bankruptcies recorded in 2023.  Mercer cited multiple macroeconomic factors hindering retailers.  While inflation has come down, consumers are looking at the prices rather than the rate of inflation, causing them to remain cautious regarding their spending.  At the same time, higher interest rates have hindered operations to some degree.  If a retailer holds any debt, the cost of that debt will increase because interest rates are considered considerably higher than they were a few years ago, Mercer said.  "You see these pressures on both sides, and then you've got other costs feeding in," he added.

US retail closures hit highest level since pandemic

The major indices are trading lower. It follows a sharp sell-off on Fri when NAZ shed 1.5%.  BA is leading the decline.  South Korean officials ordered all BA 737-800 planes to be inspected after a Jeju Air crash.  The stock market will be closed on Wed for the New Year's holiday.  Also US stock markets will close Jan 9 on Carter day of mourning.

Markets fall led by weakness in Nasdaq

Dow dropped 333 (close to session lows), decliners over advancers better than 5-1 & NAZ fell 298.  The MLP index was off 1+ to the 291s & the REIT index was off 3+ to the 397s.  Junk bond funds continued weak & Treasuries had modest selling, which lifted yields.  Oil closed fractionally higher, above 70, & gold remained weak, down 20 to 2633 (more on both below).

Dow Jones Industrials 

With a fair share of familiar obstacles & challenges ahead, 2025 will begin with a largely optimistic view for the US economy.  Elevated interest rates, potential weakening in the labor market & a likely volatile political climate on Capitol Hill are just some of the hurdles the nearly $30T economy will face.  But with consumers holding strong in the face of persistent inflation, corp profits again expected to surge & the prospect for a more business-friendly environment in DC, the mood of investors is largely buoyant heading into the new year.  “There’s a strong probability that this economy accelerates in 2025 and continues to outperform,” said Joseph Brusuelas, chief economist at RSM.  “This is the economy we want. It’s the economy we need.”  In the scenario Brusuelas considers most likely, real GDP will accelerate at a 2.5% rate in the year ahead, just a bit slower than the approximately 2.7% pace that seems likely for 2024.  That's a scenario to which he assigns about a 50% probability.  The 2nd most likely case he sees is growth that runs above 3%.  A recession, he estimates, carries only about a 15% likelihood.  Those numbers are ahead of the Federal Reserve's projection for 2.1% growth & the 2.2% estimate from the Survey of Professional Forecasters.  Still, it's consistent with a generally positive outlook for both the economy & the stock market.  The main drivers will be “strong household consumption, absolutely rock solid and fixed business investment,” Brusuelas said.  “Moreover, I’m very optimistic around the productivity-enhancing investment in equipment, software and intellectual property that firms are making to prepare for the [artificial intelligence] revolution.”  “There’s a real investment-driven story embedded inside the economy that portfolio managers really need to keep close track on,” he added.   Much of the economic story lately has been related to Pres-elect Trump's agenda of lower taxes, less regulation & tax cuts, along with what is expected to be a strong round of gov spending on things like energy exploration & AI.  However, those initiatives are more likely to be a 2026 story, with a growing likelihood that Trump will face stiff resistance in Congress on spending in particular as he tries to push his program through.  Rather, the near-term picture could be fueled more by the continued push from tech innovation & business investment, along with a resilient consumer.  Equipment spending has been surging through 2024, posting respective gains of 9.8% & 10.8% in the 2nd & 3rd qtrs, part of a surge around 4% in nonresidential investment, according to the Commerce Dept's Bureau of Economic Analysis.  Consumer spending also has held up despite higher prices, with retail sales rising 3.8% for the full year thru Nov, according to the Census Bureau.  Corp profits also are projected to see another big year.  S&P 500 companies are forecast to see growth of 14.8%, or nearly double the previous 10-year average, according to FactSet.

The economic lookout for 2025 is strong, but there’s still a lot that could go wrong

Christmas came right on time for Netflix (NFLX), as the streamer set records for the most streamed NFL games ever in the US., according to Nielsen.  Nearly 65M people across the US tuned in to the 2 NFL matchups on Christmas Day, which NFLX held exclusive rights to show.  The Baltimore Ravens' victory over the Houston Texans averaged 24.3M viewers, while the Kansas City Chiefs' win against the Pittsburgh Steelers averaged 24.1M, according to Nielsen.  The US audience for the Ravens versus Texans game peaked during Beyoncé's halftime show, with more than 27M viewers tuning in to watch the star-studded performance.  “Bringing our members this record-breaking day of two NFL games was the best Christmas gift we could have delivered,” Chief Content Officer Bela Bajaria said.  “We’re thankful for our partnership with the NFL, all of our wonderful on-air talent, and let’s please not forget the electrifying Beyoncé & the brilliant Mariah Carey.”  Wed's games were the first in a 3-year deal between the NFL & NFLX to show Christmas matchups exclusively on the streaming giant.  The stock dropped 16.59 (2%).

Netflix sets streaming record with Christmas Day NFL games

Duke Energy (DUK) said it had filed a plan with the Florida Public Service Commission to recover about $1.1B in direct costs associated with the company's emergency activation & response to hurricanes Debby, Helene & Milton.  DUK, the largest utility covering North & South Carolina, said the hurricanes hit its service territories in the past few months & rip away miles of transmission lines and power poles, leaving tens of thousands of its customers without electricity.  The company said residential customers will face an increase of about $21 per 1000 kilowatt-hours (kWh) of electricity in their monthly bills in Mar 2025 compared to Feb 2025.  The stock fell 5¢.

Duke Energy files to recover $1.1 billion in hurricane costs

Gold prices eased but were set for a weekly gain as investors gravitated towards safe-haven assets amid political uncertainty in the Middle East, overshadowing pressure from a firmer $.  Spot gold fell 0.8% to $2614 per ounce & US gold futures were down 0.9% to $2629.  There remain geopolitical hotspots around the globe, which is keeping gold in play from a safe haven perspective.  Between Russia-Ukraine & events in Gaza, investors remain keen on gold in case either situation flares up further.  In the Middle East, Israel struck multiple targets linked to the Iran-aligned Houthi movement in Yemen yesterday.  Meanwhile, Russian drones struck a multi-story apartment building yesterday in the front line town of Chasiv Yar in the Donetsk region of Ukraine.  Limiting further gains in gold, the dollar index headed for a 4th straight week of gains.  A stronger $ makes bullion more expensive for other currency holders.  Gold has gained this year, reaching a record high of $2790 on Oct 31 on the back of the Fed's rate easing & escalated tensions around the globe.

Gold Set for Weekly Gains Amid Geopolitical Uncertainty

Oil rose 1% & was on track for a weekly gain, spurred by expectations of a stimulus-driven economic recovery in China, the world's biggest oil importer & by forecasts of lower US inventories.  The forecast had expected US crude stocks to have declined by about 1.9M barrels last week & market sources said the American Petroleum Institute put the decline at 3.2M barrels.  Brent crude futures were up 74¢ (1%) at $74 a barrel.  US West Texas Intermediate (WTI) crude rose 80¢ (1.2%) from yesterday's close to $70.42.  For the week Brent & WTI were up 1.5% & 1.4% repectively.  Optimism over Chinese economic growth & oil demand was buoyed by the World Bank raising its forecast for Chinese economic growth in 2024 & 2025, but it said that subdued household & business confidence would continue to weigh next year.  Chinese authorities have agreed to issue special treasury bonds worth 3T yuan ($411B) next year, as Beijing acts to revive the sluggish economy.  However, a stronger $ capped oil price gains.  The US currency has been boosted by expectations that the incoming Trump administration's policies will boost growth & lift inflation.

Oil Heads for Weekly Gain on China Stimulus Hopes

A sell-off in Big Tech stocks weighed on the broader markets.  All 3 of the major indices fell, with the NAZ down as much as 2%.  Dow finished up 152 in the shortened week with selling in the last 2 days.

Markets retreat while interest rates keep rising

Dow sank 419, decliners over advancers 3-1 & NAZ dropped 399.  The MLP index hovered in the 292s & the REIT index was off 2 to the 399s.  Junk bond funds were little changed & Treasuries had a little selling, allowing yields to inch higher (more below).  Oil crawled up to go over 70 as Israeli strikes against Yemen’s Houthis triggers fears & gold fell 20 to 2633.

Dow Jones Industrials

Heading into the holidays, many Americans were already saddled with record-breaking credit card debt.  And yet, consumer spending is set to reach a fresh high this season.  The National Retail Federation (NRF) reported last week that spending in Nov 1 - Dec 31 is “clearly on track” to reach a record, $979 - $989B.  “Job and wage gains, modest inflation and a heathy balance sheet have led to solid holiday spending,” the NRF's chief economist, Jack Kleinhenz, said.  But other reports show that many shoppers are increasingly leaning on credit cards to manage their holiday purchases.  To that point, 36% of consumers have taken on debt this season, a recent report by LendingTree found.  And those who dipped into the red racked up an average of $1181, up from $1028 in 2023, according to the survey of more than 2000 adults.  “No one should be surprised that so many Americans took on debt this holiday season. Prices are still really high and that means that lots of Americans simply didn’t have any choice,” said Matt Schulz, LendingTree's chief credit analyst.  “Inflation is still a big deal in this country, and it’s having a huge impact on people’s finances, including their holiday spending,” he said.  Heading into the peak holiday shopping season, credit card balances were already 8.1% higher than a year ago, according to the Federal Reserve Bank of New York's report on household debt.  Further, 28% of credit card users had not paid off the gifts they bought last year, according to another holiday spending report by NerdWallet, which polled more than 1700 adults in Sep.  Of those with debt, 21% expect it'll take 5 months or longer to pay it off, LendingTree also found.  At that rate, sky-high interest charges will exact a heavy toll.  “That means less money to put towards other big goals for the new year, such as growing an emergency fund or saving for college,” he said.  “In more extreme cases, it may mean you’re less able to pay essential bills or keep food on the table. In either case, it’s a big deal.”

Credit card debt set to hit record levels as consumer holiday spending rises

Mortgage rates spiked this week to the highest level in 5 months, ending the year slightly higher than where they started.  Freddie Mac's latest Primary Mortgage Market Survey, showed that the average rate on the benchmark 30-year fixed mortgage jumped to 6.85%, up from last week's reading of 6.72%.  The average rate on a 30-year loan was 6.61% a year ago.  This week's increase marked the highest level on the 30-year loan since mid-Jul, when the rate was 6.89%, according to Freddie Mac data.  The lowest rate this year was 6.08% at the end of Sep, while the highest — 7.22% — was reached at the beginning of May.  "Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month," said Sam Khater, Freddie Mac's chief economist.  "While a slight improvement in new and existing home sales is encouraging, the market remains plagued by an overwhelming undersupply of homes. A strong economy can help build momentum heading into the new year and potentially boost purchase activity."  The average rate on the 15-year fixed mortgage climbed to 5.92% from 5.84% last week.  1 year ago, the rate on the 15-year fixed note averaged 5.95%.

Mortgage rates rise for second straight week, highest since July

The 10-year Treasury yield rose again today, hovering near a 7-month high.  The yield on the benchmark 10-year Treasury was just 1 basis point higher at 4.593%.  The 10-year rate hit a high of 4.641% in the previous session, hitting its highest level since May.  The 2-year Treasury was fractionally lower at 4.318%.  1 basis point is equal to 0.01% & yields move inversely to prices.  After the Christmas break, jobless claims data for last week came in 1000 lower at 219K, below the 225K forecast.  However, continuing claims rose by 46K for the latest week to the highest level since Nov 2021.  The 10-year Treasury yield has risen more than 40 basis points in Dec as traders anticipate a more hawkish Federal Reserve in 2025.  The central bank next meets at the end of Jan, when a rate hold is expected.

10-year Treasury yield rises slightly, hovering near a seven-month high.

Stocks opened on a downbeat note as the stock market plods to the finish of a largely triumphant year.  After stacking impressive gains this year, some of the biggest names in tech are losing ground as investors take profits, rebalance their portfolios or reassess their lofty valuations.

Markets hold steady in thin trading the day after Christmas

Dow went up 28, advancers over decliners about 5-4 & NAZ was down 10.  The MLP index dropped 5+ to the 491s & the REIT index was even at 401.  Junk bond funds remained slightly higher & Treasuries had limited buying, taking yields lower.  Oil slid back to the 69s & gold went up 18 to 2654 (more on both below).

Dow Jones Industrials 

Mortgage rates rose again this week to end the year slightly higher than where they began.  The average 30-year fixed-rate mortgage rate was 6.85% for last week, according to Freddie Mac data.  That's up from 6.72% a week earlier.  Average 15-year mortgage rates rose to 6% from 5.92%.  “Mortgage rates increased for the second straight week, rebounding after a decline from earlier this month,” Sam Khater, Freddie Mac's chief economist, said.  “While a slight improvement in new and existing home sales is encouraging, the market remains plagued by an overwhelming undersupply of homes. A strong economy can help build momentum heading into the new year and potentially boost purchase activity.”  The latest increase in rates follows the Federal Reserve's meeting & interest rate cut last week. Central bank officials signaled that they're likely to cut benchmark interest rates just twice next year, while many analysts & economists had expected as many as 4 reductions in 2025.  Mortgage rates move largely on expectations about the direction of interest rates in the future & the new information suggesting benchmark rates will stay higher for longer sent mortgage rates rising.  30-year mortgage rates spent much of 2024 in the 6-7% range, though the path was choppy.  They peaked in May at 7.22% before falling for much of the summer to as low as 6.08% in Sep.  In recent weeks, uncertainty about Pres-elect Trump’s economic policies, coupled with the Fed's slower rate-cutting timeline, pushed rates closer to 7% once again.

Mortgage rates jump to end 2024 higher than where they started

The number of Americans applying for unemployment benefits held steady last week, though continuing claims rose to the highest level in 3 years.  Jobless claim applications ticked down by 1000 to 219K last week, the Labor Dept reported.  That's fewer than the 223K forecast.  Continuing claims, the total number of Americans collecting jobless benefits, climbed by 46K to 1.9M for the latest week.  That's more than projected & the most since the week of Nov 2021 when the labor market was still recovering from the COVID-19 jobs wipeout in the spring of 2020.  The 4-week average of weekly claims, which quiets some of the week-to-week volatility, inched up 1K to 226K.  Weekly applications for jobless benefits are considered representative of US layoffs.  The labor market has hinted at some softening recently but remains broadly healthy & has held up better than many predicted considering that interest rates have been elevated for years.  The Federal Reserve instituted a series of rate increases in 2022 & into 2023 to try to tame the 4-decade high inflation that emerged during the US economy's rebound from a brief but sharp pandemic recession.

Continuing unemployment claims rise to 3-year high

Apple (AAPL), a Dow stock, hit an all-time intraday high today after a nod of confidence in its continued upswing from investors.  Its stock touched $260 early today, a record intraday high, before modestly paring gains.  The stock was still on track to notch another record close after hitting a high of $258 on Christmas Eve.  Shares have rallied more than 11% over the past month, & the iPhone maker is nearing a $4T market cap.  AAPL is closing 2024 on clashes with antitrust regulators at home & abroad.  Early data from the initial rollout of its iPhone 16 lineup didn't do much to bolster its confidence, with investment firm Jefferies issuing a rare downgrade on the stock.  Other analysts, stayed bullish on the stock as more positive iPhone shipment data engendered confidence in its artificial intelligence strategy for its consumer devices.  4th qtr earnings report in early Nov showed the tech giant beating expectations on iPhone sales, despite missing estimates overall.  Macroeconomic uncertainty could create headwinds for AAPL.  Trump's tariffs on China could impact prices for AAPL products assembled in the country, with the worst case scenario adding $256 of cost per iPhone.  The Federal Reserve's projection that it would lower interest rates less than expected in 2025 also caused fears of persistent higher rates & sticky inflation, dampening consumer confidence heading into the new year.  The stock rose 82¢ for a new record.

Apple stock touches intraday high after nod of confidence from Wall Street

Gold prices rose, driven by safe-haven demand amid light trading volumes following the Christmas holiday, as markets await signals regarding the US economy under the incoming Trump administration & Federal Reserve's rate strategy for 2025.  Spot gold rose 0.7% to $2633 per ounce & US. gold futures added 0.6% to $2650.  Some of gold's gains had to do with what's going on in Ukraine with Russia hitting Ukraine's electrical system.  Pres Biden said asked the Defense Dept to continue its surge of weapons deliveries to Ukraine after condemning Russia's Christmas Day attack against some of Ukraine's cities & its energy system.  Gold will still be purchased by central banks, & as inflation continues, there could be increased demand for gold on the retail side as well.  Gold is considered a hedge against geopolitical turmoil & inflation, but higher rates reduce the appeal of holding the non-yielding asset.  The yellow metal has gained 28% so far this year and saw an all-time peak of $2790 on Oct 31. 

Gold rises on safety demand as markets look to 2025 in holiday lull

Oil rose as stimulus measures in China may help to bolster demand & a US industry report flagged another drop in stockpiles.  Brent climbed toward $74 a barrel after a 1.3% gain on Tues, with West Texas Intermediate above $70.  In a bid to bolster growth, China is giving local officials more leeway in how they invest proceeds of gov bonds, while keeping interest rates steady for now.  Policymakers pledged a "moderately loose" monetary stance in the top crude importer earlier this month.

Oil Holds Gains with Focus on US Stockpiles

Stocks were little changed after the Christmas holiday.  Investors digested 1 of the only significant economic data points of the week.  Markets looked to be struggling bid to extend the start of the Santa Claus rally which kicked off with a bang Tues as the S&P 500 notched its best Christmas Eve performance since 1974.

Markets mixed as traders digest jobless claims data

Dow slid back 9, advancers over decliners 5-4 & NAZ was off 7.  The MLP index fell 3 to the 294s & the REIT index stayed near 401.  Junk bond funds inched higher & Treasuries had modest selling which raised yields (more below).  Oil was even just above 70 & gold added 16 to 2651.

Dow Jones Industrials

As Pres-elect Trump prepares for his 2nd inauguration in Jan, a majority of investors are optimistic on his impact on the US economy, according to the latest CNBC Delivering Alpha Stock Survey.  In all, 71% participants in the survey think Trump “will be great for the economy and markets,” while 29% disagreed with that sentiment.  Respondents were also optimistic on his policies & the development of artificial intelligence, with 57% saying they trust how Trump & his appointees will handle this technology.  Tariffs emerged as a key theme for the incoming administration.  Participants in CNBC’s Delivering Alpha Stock Survey were split 50-50 on whether the duties will help or hinder the US economy, American workers & consumers.  During his campaign, Trump called for tariffs exceeding 60% on China goods.  Last month, he also vowed to impose an additional 10% duty on Chinese goods, as well as 25% tariffs on Canada & Mexico.  Trump has already been active in selecting people to serve in key posts throughout the gov.  He has also closely aligned himself with Elon Musk, CEO of Tesla (TSLA) & SpaceX.  When asked whether Musk is a “good influence,” 36% of respondents said, “for sure.”  An equal number said they were “not so sure,” while 28% said, “no way.”  CNBC's Delivering Alpha Stock Survey, which is issued quarterly, last week polled about 40 chief investment officers, equity strategists, portfolio managers & other money managers.  Small-cap stocks emerged as the preferred asset class going into 2025, with nearly 30% of participants choosing the category.  The S&P 500, which has risen more than 26% YTD & the NAZ has surged 33% in the period.   The S&P 500 tech sector closed at a record on Tues. 

Most investors think that President-elect Trump will boost the markets, a CNBC survey found

Starbucks (SBUX) workers have expanded their strike to more cities & closed 59 stores across the US, according to the union, which represents more than 10K baristas.  The strike began Fri in Los Angeles, Chicago & Seattle, but has since spread to stores nationwide, including in Boston, Dallas, Portland, New York City, Denver, Pittsburgh, Philadelphia & St Louis.  "We respect our partners’ right to engage in lawful strike activity, and we appreciate the thousands of partners across the country who are continuing to support each other and deliver the Starbucks experience for our customers," the company said.  Workers are protesting a lack of progress in contract negotiations with the company.   Starbucks Workers United said the company has failed to honor a commitment made 10 months ago to reach a labor agreement this year.  Talks between SBUX & the union have stalled with unresolved issues over wages, staffing & schedules.  "Workers United proposals call for an immediate increase in the minimum wage of hourly partners by 64%, and by 77% over the life of a three-year contract. This is not sustainable," the company said.  SBUX said the disruptions from the strike do not have a significant impact on operations because only a handful of stores across the country are affected.  The union warned that the strike could reach "hundreds of stores" by Christmas Eve.  SBUX operates more than 11K stores & employs about 200K workers in the US.  The company & the union have been bargaining since Apr.  SBUX said it has committed to an annual pay increase of 1.5% or more for unionized workers, even if it gave a lower increase to non-union workers in any given year.  The stock rose 1.91.

Starbucks workers expand strike, closing nearly 60 stores in several US cities

Treasury yields rose as investors digested new data on weekly jobless claims.  The yield on the 10-year Treasury jumped 5 basis points 4.633% & the 2-year Treasury traded 2 basis points higher at 4.359%.  1 basis point is equal to 0.01% & yields move inversely to prices.  Jobless claims totaled 219K last week, the Labor Dept reported.  The number came just 1000 below the previous period & less than the 225K forecast.  However, continuing claims, which run a week behind, rose to 1.9M, an increase of 46K, the highest level since Nov 2021.  The benchmark 10-year rate has climbed more than 40 basis points this month.   The bulk of the advance came after the Federal Reserve pared down rate-cut projections, indicating only 2 more interest rate cuts in 2025, down from the 4 potential cuts penciled in during Sep.

10-year Treasury yield rises above 4.6% as investors digest jobless claims data

Stocks wobbled as trading resumed after the Christmas holiday & investors digest the only significant economic data point of the week.  Markets looked to be struggling in a bid to extend the start of the Santa Claus rally, which kicked off with a bang on Tues.  All 3 major indexes rose around 1%.  The S&P 500 & NAZ moved to within striking distance of their records after clawing back gains from a Fed-fueled dive last week.

Markets rise in shortened trading session

Dow went up 192, advancers over decliners about 2-1 & NAZ rose 191.  The MLP index added 4 to the 296s & the REIT index was even in the 397s.  Junk bond funds were mixed & Treasuries saw a little selling which brought higher yields.  Oil gained 1+ to go over 70  & gold slid 2 to 2626.

Dow Jones Industrials

A group of banks & business groups are suing the Federal Reserve over the annual bank stress tests. The Bank Policy Institute, which represents big banks is joining the American Bankers Association, the Ohio Bankers League, the Ohio Chamber of Commerce & the US Chamber of Commerce to file the suit, which they said aims to "resolve longstanding legal violations by subjecting the stress test process to public input as required by federal law."  The groups said they don't oppose stress testing, but that the current process falls short & "produces vacillating and unexplained requirements and restrictions on bank capital."  The Fed's stress test is an annual ritual that forces banks to maintain adequate cushions for bad loans & dictates the size of share repurchases & divs.  The Federal Reserve announced that it is looking to make changes to the bank stress tests & will be seeking public comment on what it calls "significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements."  The Fed said it made the determination to alter the tests because of "the evolving legal landscape," pointing to changes in administrative laws in recent years.  It didn't outline any specific modifications to the framework of the annual stress tests.  While the big banks will likely view the changes as a win, it may be too little too late.  Also, the alterations may not go far enough to satisfy the banks' concerns about onerous capital requirements.  "These proposed changes are not designed to materially affect overall capital requirements," according to the Fed.

Biggest banks sue the Federal Reserve over annual stress tests

Native-born American men have been fleeing the workforce in droves in a decades-long trend that coincides with a rise in immigration, according to a new analysis sounding the alarm on the issue.  The Center for Immigration Studies (CIS) released a study showing the share of working-age (16-64), US-born men not participating in the labor force has soared since the 1960s, going from 11.3% neither working nor looking for work in April 1960 to 22.1% as of Apr of this year.  "This is relevant to the immigration debate because one of the arguments for allowing in so many legal immigrants, or even tolerating illegal immigration, is that there are not enough workers," CIS said in a blog post detailing its findings.  "But this ignores the enormous increase in the number of working-age people not in the labor force.  "Further, being out of the labor force is associated with profound social problems such as crime, overdose deaths, and welfare dependency," the authors wrote. "Policy-makers should consider encouraging work among the millions on the economic sidelines rather than ignoring the problem by bringing in ever more immigrants."  The report said the total number of US-born men & women of working age who are not in the labor force was 43M as of Apr 2024, which is an increase of 8.5M since 2000.  The number of working-age US-born men not in the labor force increased by 13.2M from 1960 to 2024.  Over the same time period, the number of working-age immigrant men participating in the labor force increased by 14.1M.  The trend of US-born workers leaving the workforce while foreign-born workers replace them does not show any signs of stopping.  According to The Heritage Foundation economist EJ Antoni, Bureau of Labor Statistics data shows the net job growth in America over the past year can be attributed entirely to laborers born outside the US.  "There are now 1.1 million fewer native-born Americans employed than a year ago," Antoni wrote on X.  "[A]ll net job growth has gone to foreign-born workers, totally just over 400k since Nov '23."

New study shows alarming impact of immigration on US workforce

The roughly $1000 monthly price tag of Eli Lilly's (LLY) weight loss drug Zepbound put the blockbuster treatment out of reach for Willow Baillies, 29, whose insurance does not cover it.  Baillies, a human resources specialist based in Milwaukee, Wisconsin, has been attempting to lose weight & dealing with chronic autoimmune issues for years, so she turned to a cheaper alternative: a compounded, off-brand version of tirzepatide.  Tirzepatide is the active ingredient in Zepbound & in LLY's diabetes counterpart Mounjaro, which are part of a class of highly popular medications called GLP-1s.  She said compounded tirzepatide has helped change her life dramatically since she began taking it in Jun, alleviating pain from her autoimmune issues & helping her lose about 52 pounds.  She said it costs her around $350 per month.  But soon, compounded versions of tirzepatide could become inaccessible to Baillies & other patients who rely on them.  Patients & health-care experts said that could force some consumers to stockpile doses, switch to other treatments, or stop receiving care altogether due to financial constraints.  Others could turn to a potentially unsafe method of mixing vials themselves.  That's because the Food & Drug Administration (FDA) on Thurs announced that branded tirzepatide is no longer in short supply, a decision that will largely prevent compounding pharmacies from making & selling cheaper versions of the drug in the next 2-3 months.  During FDA-declared shortages, pharmacists can legally make compounded versions of brand-name medications.  But drugmakers & some health experts have pushed back against the practice because the FDA does not approve compounded drugs, which are essentially custom-made copies prescribed by a doctor to meet a specific patient's needs.  The FDA's decision, based on the agency's comprehensive analysis of data, could mean that more patients with insurance coverage will be able to access Zepbound after months of limited supply.  It also suggests that LLY's multibillion-dollar effort to ramp up manufacturing for tirzepatide is starting to pay off.  But it will also leave other patients in limbo, closing a niche, lucrative market for compounded tirzepatide that patients say helped fill a gap in care for those who can't afford to pay out of pocket for Zepbound.  The stock fell 3.04.

FDA says the Zepbound shortage is over. Here’s what that means for compounding pharmacies, patients who used off-brand versions

The major averages are seeing muted gains in a holiday-shortened trading session.   The equity markets will close at 1 p.m. ET today & will be closed tomorrow.  Best holiday wishes to all.   😀

Markets waver while Nasdaq stocks shine

Dow was up 66, decliners over advancers almost 5-4 & NAZ gained 192.  The MLP index crawled up 1+ to the 291s & the REIT index stayed in the 396s.  Junk bond funds inched higher & Treasuries saw more selling which raised yields.  Oil barely budged in the mid 69s & gold remained weak, down 17 to 2627 (more on both below).

Dow Jones Industrials 

American consumers are feeling less confident in Dec, a business research group says.  The Conference Board said that its consumer confidence index fell back in Dec to 104.7 from 112.8 in Nov.  The forecast called for a rise to 113.8.  Consumers had been feeling increasingly confident in recent months, spending more in the run-up to the all-important holiday shopping season.  The consumer confidence index measures both Americans' assessment of current economic conditions & their outlook for the next 6 months.  The measure of Americans' short-term expectations for income, business & the job market tumbled more than a dozen points to 81.1.  The Conference Board says a reading under 80 can signal a potential recession in the near future.  The proportion of consumers expecting a recession over the next 12 months remained stable.  The board reported that consumers' view of current conditions ticked down just more than a point to a reading of 140.2.  Consumers stepped up their spending at retail stores last month, contributing to a 0.7% rise in retail sales in Nov.

American consumers feeling less confident in December

Durable goods orders in the US fell back again last month, reversing some of the gains made the previous month.  Total orders for goods made to last at least 3 years were 1.1% lower than a month earlier in Nov, figures from the Commerce Dept showed.  That was a steeper decline than the 0.3% drop expected.  It marks a 3rd decrease in the last 4 months, following a 0.8% increase in Oct.  Orders for transportation equipment, which often sway the headline figure, were lower on month, with marked drops in orders for both civilian & military aircraft & parts, the figures showed.

U.S. Durable-Goods Orders Dropped More Than Expected

Honda & Nissan are reportedly looking at the possibility of merging, sparking speculation about what the potential move could mean, but experts say the rumors of a partnership are not a surprise.  News of the merger talks comes as both Japanese auto giants struggle to compete with the largest global electric vehicle (EV) makers, including Tesla (TSLA) & Chinese automaker BYD.  While neither Honda nor Nissan has confirmed the merger discussions, Brian Moody, exec editor at Autotrader & Kelley Blue Book, predicted roughly a year ago that there would be more of these types of partnerships, because companies can pool resources & defray costs.  Moody said that if a small brand says it is going to go all-electric that is 1 thing, but for a large company to do so is a huge undertaking that takes vast amounts of research & development.  Honda & Nissan are the 2nd- & 3rd-largest auto manufacturers in Japan, respectively, with Toyota (TM) leading them both.  The respective market capitalizations of Honda and Nissan are roughly ¥6T ($39B) & ¥1.2T ($7.6B).  "A company like Honda might not be able to do that on their own, but at the same time, Honda has some pretty compelling products, so I feel like they both bring something important to the table," Moody said.  "But the big thing is pooling resources so that [they] don't make a bad business decision for a technology, electric cars, that's growing — but not growing as rapidly as people had maybe thought or hoped," it added.  So what could a merger potentially mean for the consumer?  Moody says he could see the value in smaller, less expensive electric cars coming from such a deal.  "I could even see a merger or a partnership like this resulting in a low-cost sub brand," he said.  "Because that's what we're hearing, is that a lot of people, a lot of consumers, are saying, 'You know, new cars are just too expensive. I can't buy a new car.'"

What a Honda-Nissan merger could mean for the auto industry and consumers

Gold eases as $ yields rise in thin holiday trading.  Gold prices edged lower in a subdued holiday-season, weighed down by a robust $ & high Treasury yields as investors awaited clearer signals on the Federal Reserve's monetary policy for 2025.  Spot gold was down 0.3% at $2612 per ounce & US gold futures eased 0.7% to $2627.  The dollar index was up 0.6% against its rivals, hovering around an over 2-year high, reducing gold' appeal for holders of other currencies, while the benchmark US 10-year yield also gained.  The market continues to digest the results of the Federal Open Market Committee (FOMC) meeting last week.  A shallower rate path for 2025 is now getting factored in.  Despite the Fed's 25-basis-point rate cut last week, its signal of fewer rate reductions in 2025 sent gold to its lowest levels since mid-Nov last week.  While non-yielding gold benefits in low-interest-rate environments, investors are recalibrating expectations for next year.  Gold has set multiple record highs this year, rising 27% so far to mark its best annual performance since 2010, driven by robust central bank buying, geopolitical tensions & monetary policy easing by major banks.

Gold eases as U.S. dollar, yields rise in thin holiday trading

Oil prices rose as weaker-than-expected US inflation data revived hopes for further policy easing, although the prospect of a supply surplus next year weighed on the market.  Brent crude was up 36¢ at $73.30 a barrel.  US West Texas Intermediate crude was up 39¢ at $69.85 a barrel.  Risk assets, including US equities & crude, have started the week on a firmer footing & that cooler inflation data helped ease concerns after the Federal Reserve's aggressive interest rate cuts.  The Senate passing legislation to end the short-lived shutdown over the weekend has helped.  Both oil benchmarks fell more than 2% last week on concerns about global economic growth & oil demand after the central bank signaled caution over further monetary policy easing.  Research from Asia's top oil refiner Sinopec showed that China's oil consumption will peak in 2027, which also weighed on prices.

Oil Rises as Lower U.S. Inflation Points to Possible Easing

The history of the stock market shows that in most years, there is a "Santa Claus" rally that leaves investors on the right side of the “naughty or nice” list.  In 2024, the AI boom helped power stocks to 1 of their best years in the new millennium but, last week, the Federal Reserve put a damper on the party by drawing a hard line on interest rates, causing indices to tumble.  This has left many investors wondering if some Santa magic can erase the sell-off & put a bow on a great year.

Markets slip at the start of a holiday-shortened week

Dow dropped 259, decliners over advancers 5-2 & NAZ went up 65.  The MLP index was lower in the 289s & the REIT index dipped to the 385s.  Junk bond funds hardly budged & Treasuries saw a little selling which took yields a little higher (more below).  Oil slid down to the high 68s & gold retreated 20 to 2624.

Dow Jones Industrials

Shoppers are ready to drop some cash this holiday season as total spending this year is expected to be at least $24B higher than last year, according to the National Retail Federation (NRF).  Online shopping is still the biggest hit, but in-person shopping is making a comeback & the NRF predicts nearly ½ of all shoppers will head to department & discount stores to knock out their shopping lists.  Store owners at the Galleria at Sunset in Henderson, Nevada, said it just gets busier each year.  "Black Friday was great. We hit goal. We actually passed goal, so that was good. It's better than last year. So that was good for us. Everybody always likes to try on stuff, too. So I think that's what keeps the malls open," said Bring it Back owner Brandon Nova.  Some spots at the Galleria at Sunset are seeing a flood of visitors, especially during the holiday season.  Store owners & employees said the customers want that in-person experience.  "Most of the families have the reason to come here and make their kids come here. This is the big reason for them, you know, to come to the mall," said Crazy Bungee owner Duygu Beg.  The mall's general manager said it hasn't been this busy since the pandemic.  "I would say since COVID, it's been the first holiday season where … we're feeling the holiday spirit. The customers, you can just feel that they're happy to be out shopping, happy to be out, you know, experiencing the holiday season," said Galleria at Sunset general manager Heather Cox.  There has been a huge rebound in in-person shopping over the last 4 years as consumers start to enjoy the social aspect of going to the mall again, according to the NRF.  "We, as consumers, don't shop just because we need something," said Mark Mathews, NRF's exec director of research.  "One of the main reasons that people go out is for deals, but it's also to be with family and friends and be engaged and a fun activity. And for a lot of people, shopping is a fun activity. So, you know, I don't think we're going to ever see an end of in-store shopping?"  Gift cards are the most popular item on people's wish lists this year, followed by clothes & accessories, then books & other media, according to the NRF.

In-person shopping makes a comeback amid record-spending holiday season

Nordstrom (JWN) announced it will become a private company after it agreed to a buyout deal valued at roughly $6.25B from the founding family & Mexican department store El Puerto de Liverpool.  The company's board of directors unanimously approved of the transaction, which is expected to close in the first ½ of 2025.  As part of the deal, the Nordstrom family will have majority ownership in the company, with 50.1%, & Liverpool will own 49.9%.  Common shareholders will receive $24.25 in cash for each share of Nordstrom common stock they hold.  “For over a century, Nordstrom has operated with a foundational principle of helping customers feel good and look their best,” CEO Erik Nordstrom said.  “Today marks an exciting new chapter for the business. On behalf of my family, we look forward to working with our teams to ensure Nordstrom thrives long into the future.”  JWN stock fell 34¢ to 24.19.

Nordstrom to go private in $6.25 billion deal with founding family, Mexican retailer

Treasury yields inched higher as the holiday-shortened trading week began.  The yield on the 10-year Treasury was 2 basis points higher at 4.546%, while the 2-year Treasury was up 1 basis point at 4.330%.  1 basis point is equal to 0.01% & yields & prices move in opposite directions.  Orders for durable goods — generally big-ticket items such as aircraft, appliances & computers — fell 1.1% in Nov, the largest month over month drop since Jun, according to preliminary data from the Dept of Commerce.  This followed a 0.8% increase in Oct.  Also on the data front, the Conference Board's consumer confidence index for Dec fell to 104.7, compared to the estimate of 113.0.  The 10-year yield jumped 13 basis points last week after the Federal Reserve pared down rate-cut projections, indicating only 2 more interest rate cuts lie ahead in 2025, down from 4 potential cuts that had been signaled in Sep.  Yields cooled a bit Fri after the Nov personal consumption expenditures price index, the Fed's preferred measure of inflation, came in slightly below expectations.  Markets close early tomorrow & are shuttered Wed for the Christmas holiday.

Treasury yields trade slightly higher to start holiday week

Stocks were mixed as investors considered the path of interest rates next year after the Fed hinted they would stay higher for longer.  The  stock market is coming off an upbeat Fri but a downbeat, & volatile, week with all 3 major averages up above 1% Fri but down around 2% for the week.  The Fed is playing the part of the Grinch, signaling that it will step back its pace of cutting next year, leading stocks to 2 of the worst days of the year on Wed.  Investors are betting on the Fed holding rates steady next month & for its subsequent meeting in Mar, bets are about 50-50 on a cut vs. a hold.