Markets slip lower on fears about higher yields and future inflation

Dow finished down 25 (substantially below early trading) & decliners ahead of advancers 4-3 but NAZ rose 243.  The MLP index was fractionally higher above 300 & the REIT index pulled back 6 to the 393s.  Junk bond funds hardly budged & Treasuries continued weak which brought higher yields.  Oil saw selling in the PM, taking it lower in the 73s, & gold dropped 9 to 2645 (more on both below).

Dow Jones Industrials 

McDonald's (MCD), a Dow stock & Dividend Aristocrat, is hoping for a fresh start in 2025 following a year in which its stock underperformed under the weight of lackluster sales & an E coli outbreak.  Enter its new national value platform, McValue, for some course correction.  It includes a $5 meal deal that launched last Jun, which led to a slight boost in foot traffic but was later disrupted by the E coli outbreak that began in Oct.  It also has a buy 1, add 1 for $1 option.  Lastly, there will be local deals & in-app exclusives.  All US locations will begin offering the McValue platform starting tomorrow.  The launch day has been months in the making, MCD's owner & operator John Palmaccio said.  He serves as the Operator's National Advertising Fund Chair & owns 30 MCD's in South Carolina & Georgia.  "We took the time to get it right, working closely with the company to review consumer and deal performance data and make sure the McValue business case was solid,” Palmaccio said.  MCD stock fell 2.50.

McDonald's to launch national McValue menu as it looks for a boost

Deere & Co (DE) strengthened its bet on autonomous machinery by unveiling new tractors & industrial equipment, capable of operating without the need for a human being in the cab, at the CES trade show in Las Vegas.  The world's largest farm equipment maker is making strides towards automating manual work amid a shortage of skilled workers & high labor costs.  In the agricultural sector, the challenge of finding workers to operate tractors has been a persistent issue & has been worsened by the pandemic.  "Our agriculture, construction and commercial landscaping customers all have work that must get done at certain times of the day and year, yet there is not enough available and skilled labor to do the work," DE chief technology officer Jahmy Hindman said. The company revealed the 2nd generation of its autonomy kit, which combines advanced computer vision, AI & cameras to help machines navigate terrains.  DE & other equipment makers have invested heavily in technology to automate off-highway vehicles such as farm tractors and mining vehicles.  The stock fell 3.15.

Deere boosts bet on autonomous tractors with new machines

Disney (DIS), a Dow stock will combine its Hulu + Live TV business with sports streamer FuboTV (FUBO) in the first major media dealmaking move of 2025.  DIS will control 70% of FUBO & shareholders of the sports streamer will own the remaining 30% of the combined business, which will operate under the Fubo publicly traded company name.  In conjunction with the transaction, FUBO with DIS, Fox (FOX) & Warner Bros Discovery (WBD) related to Venu Sports, the planned sports streaming platform previously announced by the trio.  The combination of the 2 businesses will form one of the largest digital pay-TV providers as consumers search for cable alternatives amid increased cord-cutting.  FUBO, which offers users access to live TV channels over the internet, has primarily focused on sports & news.  Hulu + Live TV, categorized as a cable replacement option, similar to YouTube TV, allows users to stream from about 100 live TV channels across sports, news & entertainment.  FUBO said the combined company is expected to "become immediately cash flow positive," with over 6.2M subscribers in North America & over $6B in revenue.  "We are delighted by today's outcomes," said David Gandler, co-founder & CEO of FUBO, who will also run the new business.  "Increased scale means we have the flexibility to pursue diverse growth strategies, opening up a range of opportunities, both domestically and internationally."  DIS stock inched slid 15¢ & FUBO stock soared 3.59 to 5.06.

Disney to combine Hulu + Live TV with FuboTV

Gold prices fell as Treasury yields rose, while the Federal Reserve's recent hint at a slower pace of rate cuts in 2025 kept investors keenly awaiting a slew of economic data due this week to shed more light on that view.  Spot gold  fell 0.3% to $2632 per ounce & US gold futures were down 0.4% at $2644.  Bond yields are back up again, placing pressure on gold.  Yield on the 10-year US Treasury Note rose to an over 1-week high, making non-yielding gold less attractive.  The Fed's latest projections in Dec implied a shift to a more cautious pace of rate cuts this year, with the majority of the policymakers expressing concern that inflation could reignite.  The central bank may need to keep rates higher for longer to address persistent inflation, which remains above its 2% target.  Pres-elect Trump takes office on Jan 20 & his proposed tariffs & protectionist policies can stoke further inflation.

Gold prices dip as yields rise, market girds for US economic data

Oil prices fell amid a stronger $ ahead of key economic data by the Federal Reserve US payrolls data later in the week.  Brent crude futures were down 28¢, at $76.23 a barrel after closing at their highest since Oct 14 on Fri.  US West Texas Intermediate crude futures were down 27¢ at $73.69 a barrel after closing at their highest since Oct 11 on Fri.  Crude prices posted gains in the previous 5 sessions on hopes of improved demand following cold weather in the Northern Hemisphere& more fiscal stimulus by China to revitalize its battered economy.  The $'s ​​strength, however, is a concern for investors.  The $ held near a 2-year high today.  A stronger $ makes $-priced commodities more expensive.   Investors are also looking to economic news for further clues on the outlook for Federal Reserve interest rates & energy consumption.

Oil prices plunge from record highs as dollar strengthens

There has not been a lot of excitement in the stock market lately, so investors are looking for problems.  Treasury yields have been strong recently & worries about higher yields bother nervous investors.  When Trump becomes Pres on Jan 20, there will be more information about the path for interest rates.  Then the Fed will hold its next meeting.