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January 16, 2025
DOW: 43138.96
S&P: 5949.13
Nasdaq: 19497.75
10YR T-Note: 4.68%
Bitcoin: 97640.98
VIX: 16.12
Gold:2747
Crude Oil:79.62
Prices Current as of 10 :11 am
Source: CNBC
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.
What happened in yesterday’s upside rocket ship was what I said could take place if:
- the December C.P.I. came in lower than expected, which it did;
- the initial wave of bank earnings came in higher than expectations, which they also did as well.
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So thank you for acknowledging that this would take place under certain circumstances, which fell exactly into place as I assumed that they would.
As a result, the Dow skyrocketed higher by a large 703 points to 43,221 while more importantly the S&P finally broke out of its recent downside funk with a huge 107 point gain by 107 to 5950 and the really recently weak Nasdaq finally awakened from its slumber with a 467 point upside move to 19,501 as the large former technology leaders really exploded higher for the best gains in two months, as did the overall market.
The Russell 2000 Index finally joined in the upside fun with a 44 point gain to 2263 while the VIX got blasted lower to 16.12.
The main item was the December C.P.I. report which came in more moderately than expected with a 0.4% monthly advance and 2.9% year over year. Ex-food and energy was 0.2% and 3.2% better for the year. And then we got better earnings and strong market performances from Dow component JPM, in addition to GS, C and WFC.
Treasury yields also eased in the bond market following the update on how much more U.S. households had to pay in December for eggs, gasoline, housing and other costs of living. While no one wants higher inflation, the numbers were more encouraging underneath the surface. After ignoring prices for food and energy, which can zigzag sharply from month to month, underlying inflation trends slowed to 3.2% in December. Economists had thought it would remain at 3.3% for a fourth straight month, according to FactSet.
The Federal Reserve pays more attention to that underlying number than the overall figure, and it is particularly welcome following worries that improvements in inflation have stalled and that it will be tough to get all the way down to the Fed’s 2% target.
Few traders expect Wednesday’s data to convince the Fed to cut its main interest rate at its meeting later this month, as it has done at three straight meetings since September. But economists and analysts say it could open the door for cuts later in the year, maybe even in March, if more data comes in to show that upward pressure on inflation is abating.
Perhaps the key takeaway is that markets are likely to be whipsawed over the next few data releases as investors seek a narrative that they can be comfortable with for more than just a few days at a time.
Investors have been lurching down and up for weeks as traders tear up their forecasts for what the Fed will do with interest rates in 2025. A further easing would boost the U.S. economy and prices for investments, but it could also give inflation more fuel.
Traders were ebullient last year about the possibility of a string of cuts to rates, when they sent stocks to dozens of all-time highs, only to rein in their expectations more recently. The Fed itself has indicated it may cut rates only two times this year instead of the four it had earlier projected, and some traders have even considered the possibility of future hikes to rates.
Wednesday’s update quashed speculation about hikes in the near term, and Treasury yields eased in the bond market on growing hopes for coming cuts. The yield on the 10-year Treasury dropped back to 4.65% from 4.79% late Tuesday, which is a considerable move. It had largely been moving higher since September, when it was below 3.65%.
The two-year Treasury yield, which more closely tracks expectations for the Fed’s upcoming actions, fell to 4.26% from 4.37%.
BLDR, a supplier of countertops and other building materials rose for example. It and other housing-related companies would get a boost from easier mortgage rates.
The FTSE 100 in London rallied 1.2%. U.K. markets have been under pressure because of rise in bond yields amid worries about a sluggish economy and the country’s finances. Indexes also rose 0.7% in France and 1.5% in Germany. They were more subdued in Asia, where trading closed before the release of the U.S. inflation data.
This week is the start of the 4Q earnings season and is important to perhaps set the tone for what is coming; yesterday – BLK, C, WFC and Dow components GS and JPM higher; today – MS, TSM, BAC higher and Dow component UNH lower in addition to USB; Friday – FAST, SLB and SST.
Economic reports will see: yesterday – December CPI rose by 0.4% and 2.9% for the year and the ex-food and energy component gained 0.2% and 3.2% for the year; today – December retail sales rose by 0.4% and ex-autos also up by 0.4%, weekly jobless claims rose to 217,000, Philadelphia Fed Manufacturing January Survey was ahead by a large 44.3, December import price rose 0.1% and export prices were ahead by 0.3%; Friday – December housing starts, December capacity utilization and industrial production.
