Weekly Market Commentary – 12/9/24

The S&P 500 forged another set of all-time highs as investors embraced the idea of an economy running at a pace appropriate for the Fed to consider further rate cuts. Leadership in the market toggled back to the mega-cap technology issues, with the communication services, information technology, and consumer discretionary sectors leading the way.  Salesforce.com’s 3^rd quarter results reminded the street of the enormous opportunity in AI with an encouraging outlook from the software provider.  President-elect Trump continued to define his administration and policy with the nomination of Kash Patel as FBI director and warning BRIC nations of dismantling the US dollar as the world’s reserve currency.  Trump also insisted that the hostages in Gaza be released just as the ceasefire between Israel and Hezbollah appeared to be falling apart. 

The S&P 500 gained 1% and is now up 27.7% for the year.  The Dow closed lower by 0.6%; the NASDAQ outperformed, returning 3.3% and the Russell 2000 fell by 1.1%.  US Treasuries ended the week higher across the curve as the 2-year yield fell by six basis points to 4.10%, and the 10-year yield fell by three basis points to 4.15%.  Oil prices fell by $1.28 or 1.9% to $67.17 as OPEC + stayed the course with their production outlook.  Gold prices fell fractionally to close at $2658.90.  Copper prices rose by $0.06 to $4.20 per Lb.  Bitcoin regained the $100k mark before closing at $99,400 on Friday.  The US dollar index gained 0.3% and closed at 106.09.  Notably, the VIX, a measure of market volatility, closed at 12.72, down 37% from just before the US Presidential election. 

The Economic calendar showcased the November Employment Situation Report, which showed a bounce back in payrolls.  Non-farm payrolls increased by 227k versus the street consensus of 220k.  Private payrolls increased by 194k versus the consensus estimate of 190k.  The Unemployment rate ticked higher by 0.1% to 4.2%.  Average Hourly earnings came in at 0.4% above the previous print of 0.3%.  The data aligned with expectations and strengthened the argument that the Federal Reserve will cut their policy rate by twenty-five basis points at their December 18^th meeting.  ADP employment figures, Initial Claims, and Continuing Claims continued to show a resilient labor market.  ISM Manufacturing came in at 48.4, above the prior reading of 46.5, but still showed that part of the economy was in contraction.  ISM Non-Manufacturing came in at 52.1, which was much weaker than the prior reading of 56.  Finally, a preliminary look at the University of Michigan’s Consumer Sentiment Index saw a nice uptick to 74 from the previous reading of 71.8.