The stock market decided to give us a little Christmas gift last week. Despite the shortened trading schedule, we saw some modest gains across the board. The S&P 500 wrapped up 0.7% higher, while the Dow Jones Industrial Average and Nasdaq Composite followed suit with 0.4% and 0.8% increases, respectively.
Now, I’ve been in this game long enough to know that the “Santa Claus rally” isn’t always a guarantee, but it sure does tend to spread some holiday cheer. This year, it kicked off on Tuesday, and while the gains weren’t earth-shattering, they were certainly welcome.
A few standout performers caught my eye:
- NVIDIA climbed 1.7%
- Tesla revved up 2.5%
- Broadcom surged an impressive 9.5%
Qualcomm also had reason to celebrate, with a 2.9% increase after a favorable jury decision regarding its agreement with Arm Holdings.
Bonds and Treasuries
While equities were doing their holiday dance, the bond market was singing a different tune. Treasury yields continued their upward march, with the 10-year reaching levels we haven’t seen since May. As an old mentor of mine used to say, “When bonds yield, stocks may shield.” It’s a delicate balance, and one we’ll need to watch closely in the coming weeks.
US Market Highlights
Turning our gaze to broader U.S. market highlights, several key developments emerged that could shape investor sentiment moving forward. The Federal Reserve has projected a slower pace of interest rate cuts, with only two anticipated in 2025 despite solid growth forecasts and persistent inflation pressures.
This cautious approach indicates that while the economy is resilient, inflation remains a concern that could influence monetary policy decisions in the near future.
Additionally, a potential government shutdown was averted after bipartisan funding measures were approved by the Senate, allowing federal agencies to operate at current levels for three months while adding disaster relief and farm aid provisions. Inflation data also showed signs of cooling; November’s figures indicated a softer-than-expected annual rate of 2.4%, with core PCE rising to 2.8%, both below previous forecasts. However, concerns linger as U.S. manufacturing continues to struggle; December’s PMI fell to 48.3—the lowest level since mid-2020—reflecting rising input costs and tariff fears that weigh heavily on industry sentiment.
The economic calendar was as bare as a Christmas tree on December 26th, but we did get a few nuggets of information:
- Weekly jobless claims came in lower than expected at 219,000, showing some resilience in the job market.
- Continuing jobless claims hit their highest level since November 2021, a trend we’ll need to keep an eye on.
- The Fed is projecting a slower pace of rate cuts, with just two more expected in 2025. As someone who’s weathered many a Fed decision, I can tell you this is significant.
- Inflation showed signs of cooling in November, with the Fed’s key gauge at 2.4% annually. It’s not quite time to pop the champagne, but it’s a step in the right direction.
Here’s a bit of financial wisdom for you: “The stock market is a device for transferring money from the impatient to the patient.” – Warren Buffett. And let me tell you, patience is a virtue I’ve had to cultivate over my years in this industry.
Global Markets
Globally, markets exhibited mixed performance amid various developments impacting investor confidence. Apple is reportedly in talks with Tencent and ByteDance to roll out AI features in China as it navigates local regulations and declining market share in one of its largest markets.
Meanwhile, Honda and Nissan are reportedly beginning merger discussions aimed at forming a holding company alongside Mitsubishi, which would create an auto giant capable of selling eight million vehicles annually.
The global markets were a mixed bag this week, with some interesting developments:
- Apple is making moves in China, talking with Tencent and ByteDance about AI features. As someone who’s watched the tech giants dance for years, this could be a game-changer.
- Honda and Nissan are reportedly eyeing a merger. If it goes through, we’re looking at an auto behemoth that could shake up the industry.
- German business confidence hit a post-pandemic low. As an analyst who’s seen his fair share of economic cycles, this is a red flag we can’t ignore.
Commodities & Crypto Corner
Energy
Oil prices faced downward pressure due to a strengthening U.S. dollar and fears surrounding slower demand growth anticipated for 2025. The dollar index reached its highest level in two years, contributing to Brent crude prices falling back to around $72 per barrel—a decline of approximately 3% over five days—and WTI dropping below $70 per barrel.
Metals
Base metals also felt the pinch from rising dollar values; copper prices fell to $8,880 per tonne in London as aluminum continued its downward trend for five consecutive sessions to $2,507 per tonne. Gold has not fared much better either; competition from rising bond yields has seen gold prices dip to around $2,600 per ounce as T-Bonds now offer yields not seen since May.
Crypto
The cryptocurrency market was particularly volatile last week. Bitcoin reached an all-time high exceeding $108,000 on Tuesday before plummeting nearly 12% over subsequent days to around $93,500—a stark reminder of how quickly fortunes can shift in this space. Ether followed suit with a dramatic decline of nearly 19%, closing near $3,000 as risk aversion swept through markets during this holiday period.
Key Events & Calendar
Looking ahead at our calendar for this week reveals another holiday-shortened schedule with sparse economic data on tap but some key reports that could influence market sentiment significantly. On Monday, we’ll see pending home sales data for November released; Thursday will bring purchasing managers’ data from both the Institute of Supply Management and S&P Global for December; and Friday will conclude with initial jobless claims figures.
This week’s calendar is packed with market-moving events. Here’s what I’m focusing on:
- The Federal Reserve’s final rate decision of the year (Wednesday)
- Bank of Japan and Bank of England decisions (Thursday)
- November U.S. retail sales data
- Q3 GDP update
- November personal income and outlays report, including the Fed’s favorite inflation gauge
- Earnings from Micron Technology, FedEx, and Nike
Each of these events has the potential to move markets, and I’ll be watching them all closely.Remember, as the great Benjamin Graham once said, “The investor’s chief problem – and even his worst enemy – is likely to be himself.” Stay disciplined, stick to your investment strategy, and don’t let short-term market noise derail your long-term plans.
From my trading desk to yours, here’s to another week of opportunities in the markets. Stay sharp, stay curious, and as always, may your trades be profitable.
