Markets are prepared for first 9-day losing streak in 50 years

Dow dropped 235, decliners over advancers 5-2 & NAZ pulled back 76.  The MLP index slid 1+ to 294 & the REIT index was steady at 415.  Junk bond funds drifted lower & Treasuries had some buying which took yields a little lower (more below).  Oil fell 1+ to thee 69s & gold retreated 16 to 2653.

Dow Jones Industrials

Respondents to the CNBC Fed Survey for Dec are sure the Federal Reserve will cut rates tomorrow but they are less sure whether it should.  Amid forecasts for somewhat higher inflation & lower unemployment than in the prior survey, 93% see a qtr-point cut coming.  But only 63% believe it's what the Fed ought to do.  The outlook for 2025 is for just 2 more qtr-point cuts, down from 3 in the last survey, bringing the funds rate down to 3.8% by this time next year & 3.4%, or just above the average neutral rate, by the end of 2026.  One big unknown is the incoming administration's fiscal policies.  Respondents expressed a range of opinions: from concern about higher inflation to bullishness for growth.  The survey of 27 respondents, including economists, strategists & fund managers, showed that the outlook for Pres-elect Trump's tariffs & threatened deportations dampened the upside for some forecasters.  “I can’t remember being this uncertain about the inflation outlook,” said economist Robert Fry.  “President-elect Trump is offering us a mix of inflationary (tariffs, individual tax cuts) and disinflationary (deregulation, spending cuts) policies. Who knows what combination we’re going to end up with?” 56% of respondents see the effects of policies from the incoming administration that are likely to be enacted as “somewhat inflationary” & a further 11% see them as “extremely inflationary.”  They are divided on the growth effects, with 41% seeing the policies as “somewhat positive” for growth & 41% viewing them as “somewhat negative.”  The biggest risks to the expansion are high inflation & global economic weakness, with a tie for 3rd between the incoming administration's fiscal policies & the size of the US deficit.  Several survey participants wrote in “tariffs” specifically as a top threat.  There's uncertainty over the purpose of the tariffs & whether they are just negotiating tactics.  Overall, 37% say tariffs are a negotiating tactic that are likely to be temporary, 19% see them as revenue measures that are likely to be more permanent & 41% believe it will be a combination of the 2.  2/3 say the threatened 25% tariffs on Mexico & Canada will depend on negotiations, but 70% expect Pres-elect Trump to carry thru on 10% additional tariffs on China.  Respondents raised their outlook for the S&P 500 next year but increasingly see equities as overextended.  From current levels, the S&P 500 is forecast to rise just 3% next year & 7% by 2026.  But 69% of participants sees stocks as overpriced for a soft-landing scenario, the most in the 17 months CNBC has asked the question.

The Fed is likely to cut rates, but some worry it may not be the right move, CNBC survey found

Pfizer (PFE) forecast 2025 profits roughly in line with expectations, offering some relief to investors after a tumultuous year during which it attracted criticism from activist hedge fund Starboard Value.  Shares rose after the drugmaker also said it was expecting 2025 sales of its Covid-19 vaccine & drug to be consistent with 2024 levels.  The company expects adjusted EPS of $2.80 - $3, compared with the estimate of $2.88.  PFE has been reining in costs & shedding non-core businesses to pay down debt as it rebuilds itself after a sharp slump in sales of Covid-19 products.  Shares trade at less than ½ their value during the peak of the Covid-19 pandemic.  That has left it open to investor criticism, with Starboard in Oct saying that management has over-spent on big acquisitions & failed to produce profitable new drugs from those deals or from its internal research & development.  PFE forecast 2025 revenue of $61 - $64B, compared with the estimates of $63.2B.  The company also estimated a roughly $1B hit to its revenue from changes to Medicare's Part D prescription program under Pres Biden's Inflation Reduction Act.  The stock rose 94¢.

Pfizer forecasts 2025 profit in line with expectations as it seeks turnaround

Treasury yields moved slightly lower, as investors parsed economic data due ahead of the Federal Reserve's next interest rate decision.  The yield on the 10-year Treasury was down by 1.8 basis points at 4.381% & the 2-year Treasury yield was last more 1.1 basis points lower at 4.238%.  Yields & prices move in opposite directions & 1 basis point equals 0.01%.  US retail sales figures for Nov showed an increase of 0.7% on the month, surpassing expectations.  The report will be followed by the latest building permit & housing starts data tomorrow, before the Fed announces its interest rate decision that same day.  Investors will also be closely following the post-meeting press conference with Fed Chairman Jerome Powell, as well as keeping an eye on any guidance issued by the central bank alongside.  This will include the Fed's economic & interest rate projections, which are published 4 times a year.

Treasury yields rise as traders await Federal Reserve interest rate decision

Stocks fell despite upbeat retail sales data as the Federal Reserve kicked off its 2-day policy meeting expected to usher in an interest-rate cut.  Markets are waiting for Fed policymakers to kick off their final gathering of the year, amid almost total conviction that a 0.25% rate cut is coming tomorrow.  Some suspect it could be the last cut for some time, as inflation proves persistent.