On Friday, the S&P 500 Index ($SPX) (SPY) fell -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) fell -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -0.05%. March E-mini S&P futures (ESH26) fell -0.08%, and March E-mini Nasdaq futures (NQH26) were off -0.07%.
The S&P 500 index reached a new record high on Friday, but then fell back and closed the day slightly lower. Stocks ran out of gas on Friday before the weekend, but the S&P 500 index still closed up +1.4% on the week, and the Nasdaq 100 index closed up +1.2% on the week.
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The 10-year T-note yield fell -0.6bp on Friday, providing some underlying support to the stock market. Also, the probability of a rate cut at the FOMC meeting has increased to 20% from a low of 13% on Tuesday.
Shares were supported during the week by confidence in the US economic outlook, following Tuesday’s news that US Q3 real GDP grew +4.3% (q/q annualized), significantly exceeding market expectations of +3.3%.
Gold, silver and platinum hit new all-time highs on Friday amid early dollar weakness and geopolitical concerns over US strikes in Nigeria and ongoing tensions in Venezuela.
The United States on Thursday launched strikes against ISIS targets in Nigeria as part of security and intelligence cooperation with the Nigerian government to combat increasing terrorist attacks in the country. Nigeria is an OPEC member. Mr Trump had earlier warned that the US would attack ISIS in Nigeria if the group did not stop killing Christians.
The US Coast Guard forced the sanctioned oil tanker Bella 1 into the Atlantic Ocean off Venezuela, Bloomberg reports. The US military has been monitoring the ship for several days as part of President Trump’s blockade of sanctioned oil tankers linked to Venezuela. US forces wanted to board Bella 1 near Barbados on Sunday, but the ship headed back into the Atlantic Ocean.
There may be some progress on the Ukraine-Russia peace deal as Ukrainian President Zelensky said he hopes to meet with President Trump in Florida on Sunday. Mr Zelensky said the 20-point peace plan was 90% ready, but it depended on a meeting with Mr Trump and could not be finalized without input from Russia and Europe. Russia reportedly said the 20-point peace plan fails to answer many questions.
Seasonal factors are bullish for stocks. Since 1928, the S&P 500 has risen 75% in the last two weeks of December, climbing an average of 1.3%, according to data from Citadel Securities.
Markets are giving a 20% discount for a -25bp rate cut at the next FOMC meeting on January 27-28.
Foreign stock markets closed with gains. The Euro Stoxx 50 was closed on Friday as part of the Christmas holidays. China’s Shanghai Composite closed +0.10% higher for its eighth consecutive daily gain. Japan’s Nikkei Stock 225 closed up +0.68%.
interest rates
March 10-year T-notes (ZNH6) rose by +2.5 ticks. The 10-year T-note yield fell -0.6bp to 4.128%. T-note prices were supported by a -2.5% decline in crude oil prices on Friday and a -1.2bp decline in the 10-year breakeven inflation expectations rate to 2.225%.
European government bond markets were closed on Friday as part of the Christmas holidays.
The swaps are discounting a +5% probability of a +25 bp rate hike by the ECB at its next policy meeting on February 4.
US Stock Movers
Shares of Magnificent Seven closed mixed on Friday. Nvidia (NVDA) rose +1.0%, but Tesla (TSLA) fell -2.10%, and four other Magnificent Seven stocks also closed with declines.
Nvidia (NVDA) rose +1.0% after news of a licensing deal with AI startup Grok as a means of injecting Grok’s AI inference and low-latency chip technology into Nvidia’s product lineup.
Chip stocks closed mixed as Nvidia led the way. Additionally, ASML Holding (ASML) and Broadcom (AVGO) closed up +0.6%. However, Arm Holdings (ARM) and NXP Semiconductors (NXPI) closed down more than -1%.
Cryptocurrency-exposed stocks closed mostly lower, with Bitcoin (^BTCUSD) down about -0.4%.
Galaxy Digital Holdings (GLXY) fell more than -4%. Mara Holdings (MARA) and Riot Platforms (RIOT) fell more than -3%. Coinbase Global (COIN) fell -1.2%.
Energy companies showed weakness across the board as crude oil prices fell -2.4% on Friday. Devon Energy (DVN) and Marathon Petroleum (MPC) fell more than -1%.
Mining companies saw strength, with gold, silver and platinum hitting record highs and copper trading higher. Coeur Mining (CDE) and Freeport McMoRan (FCX) closed up more than 2%. Hekla Mining (HL) and Newmont Mining (NEM) rose +1% or more.
Target (TGT) closed up more than +3% after the Financial Times reported that activist investor Toms Capital Investment Management built a stake in the retailer.
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On the date of publication, Rich Asplund did not have (directly or indirectly) any positions in any securities mentioned in this article. All information and data in this article is for informational purposes only. Please see the Barchart Disclosure Policy here for more information.
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