Daily Market Notes | 5-minute read

December 17, 2024

By Donald Selkin | Chief Market Strategist

DOW: 43,506

S&P: 6,039

Nasdaq: 20,018

10YR T-Note: 4.38%

Bitcoin: 106,501

VIX: 15.37

Gold: 2,655.10

Crude Oil:69.66

Prices Current as of 10:21 am

Source: CNBC

40+ Years on

Don Selkin, the creator and innovator of the "Fair Value" numbers, as its Chief Market Strategist on the Newbridge platform has given CNBC and its Predecessor, these numbers every day for the over 40 years - never missing a single day, as well as given the fair value for the Nasdaq 100 futures since their introduction in 1996 and the Dow Jones stock index futures since 1997. Mr. Selkin has also been quoted in several publications including but not limited to Bloomberg News, New York Post, Reuters, and The New York Times. Mr. Selkin's Fair Value numbers are included in the U.S.
Futures Report broadcast on CNBC every day before the market
opens attributing "Newbridge Securities" as the source. In addition, NSC provides to its professionals, their clients and the public access to Don Selkin's more in depth financial market views.

The market yesterday did what it has done so often lately, namely the pathetic Dow falling for the eighth straight session and the last time that this took place was back in 2018 while the Nasdaq achieved another new record high on strength in most of the large technology stocks.

The former once again could not hold on to any gains and drifted lower as the session moved into the close, with a further late selloff which ended the index at its worst level at a 110 point decline down to 43,717. This time the losers were AMGN (and what else is new here), CAT, CVX on weakness in energy prices, HD, JNJ, NVDA which appears to have run out of steam for the time being and finally UNH (and what is new with this one lately).

On the other hand, the S&P did nicely but got dragged off of its best levels late in the session and ended with a 23 point gain to 6074 with the large technology stocks having one of their best days in a while, with the exception of NVDA as mentioned.

The hero was the Nasdaq, which closed strongly higher at 247 points to 20,173 while the NDX hit another record with a very strong 316 point gain as all of the Magnificent Seven exploded upward once again with the exception of NVDA.

The Russell 2000 Index of small stocks got dragged nominally higher with 15 points to 2362 while the VIX really acted strangely with a gain up to 14.69 on what was a better day for the S&P and Nasdaq as that 13 area and below has really held up well.

All of this comes ahead of Wednesday’s always important Federal Reserve interest rate decision at 2pm which could help set the direction of the market into next year.

And for the second straight session, AVGO made a large gain to help lead the S&P for a second straight day after delivering a profit report last week that beat analysts’ expectations. The technology company is riding a wave of enthusiasm about its artificial-intelligence offerings in particular.

The market’s main event, though, will arrive on Wednesday when the Federal Reserve will announce its last move on interest rates for the year. The widespread expectation is that it will cut its main rate for a third straight time, as it tries to boost the slowing job market after getting inflation nearly all the way down to its target of 2%.

The question is how much more it will cut rates next year, and Fed officials will release projections for where they see the federal funds rate ending 2025, along with other economic indicators, once their meeting concludes. Fed Chair Jerome Powell will also answer questions in a press conference following the meeting.

For now, the general expectation among traders is that the Fed may cut a couple more times in 2025, according to data from CME Group. But such expectations have been shrinking following reports suggesting inflation may be tougher to get all the way down to 2% from here. Besides last month’s slight acceleration in inflation, another worry is that the President-elect’s preferences for tariffs and other policies could lead to higher inflation down the line.

Expectations for a series of cuts to rates by the Fed have been one of the main reasons the S&P has set an all-time high 57 records and is heading for one of its best recent years. The economy has held up better than many feared, continuing to grow even after the Fed hiked the federal funds rate to a two-decade high in hopes of grinding down on inflation, which topped 9% two summers ago.

MSTR jumped as much as 7% during the day as it continues to benefit from the rollicking price for bitcoin, which set another all-time high. But its stock ended the day down after bitcoin’s price pulled back below $106,000 after setting a record above $107,700, according to CoinDesk. And once again, as I have said so many times, the very high calls up to 1080 really have no business for this week at this price and is a very nice way to sell for those who own the stock, or even lower prices into the 800’s to 900’s to get some downside protection.

The software company has been building its hoard of the cryptocurrency, and its stock price has more than sextupled this year and will also soon join the Nasdaq 100 index.

Bitcoin’s price has catapulted from roughly $44,000 at the start of the year, riding a recent wave of enthusiasm that the new President will create a system that is more favorable to digital currencies.

Dow component HON gained after saying it’s still considering a spin-off or sale of its aerospace business, as part of a review of its overall business. It said it plans to give an update with the release of its fourth-quarter results.

In the bond market, Treasury yields held relatively steady as the 10-year edged down to 4.39% from 4.40% late Friday. The two-year yield, which more closely tracks expectations for the Fed, eased to 4.24% from 4.25%.

In stock markets abroad, indexes fell modestly across much of Europe and Asia.

They sank 0.9% in Hong Kong and 0.2% in Shanghai after China reported lackluster economic indicators for November despite attempts to strengthen the world’s second-largest economy.

South Korea’s Kospi fell 0.2% as law enforcement authorities pushed to summon the impeached President for questioning over his short-lived martial law decree, and the Constitutional Court met to discuss whether to remove him from office or reinstate him.

Earnings this week will see: tonight – GIS, LEN, JBL, MU; Thursday – KMX, CAG, FDS, FDX, PAYX and Dow component NKE.

Economic reports will have: today – November retail sales were up by 0.7% while ex-autos were up by 0.2%, November industrial production fell by 0.1% and capacity utilization slipped to 76.8 which was the lowest in three years; Wednesday – November housing starts and the Fed interest rate decision at 2pm; Thursday – final estimate of 3Q G.D.P., November L.E.I., weekly jobless claims; Friday – November personal income and spending.

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