Kuby's Commentary

Last week, holiday-shortened trading brought volatility to the stock market with hopes for a Santa Claus Rally fading by Friday. The S&P 500 (+0.7%), Nasdaq Composite (+0.8%), and Russell 2000 (+0.2%) ended a two-week losing streak, but the bond market continued its sell-off, pushing the 10-year Treasury yield to 4.62%, the highest in over 15 years. North Star suggests considering longer bond durations if rates reach 5%. With light trading expected this week and markets closed Wednesday for New Year’s, activity may remain subdued.

Last week, value stocks saw a rebound as the IVE (iShares S&P 500 Value ETF) ended its 14-day losing streak, despite broader market declines. Small-cap value underperformed, while uncertainty surrounding the Federal Reserve's hawkish stance and the Trump administration's policies drove volatility. The Fed cut rates by 25 basis points but projected fewer cuts for 2025, sparking a market sell-off after Powell's cautious comments.

On the bright side, the Fed’s preferred inflation gauge showed softer-than-expected data, signaling potential easing in 2025 and supporting value stocks. Despite widespread declines, value strategies remain well-positioned across market caps.

Last week, markets displayed a mixed performance as the Nasdaq edged higher (+0.3%), while the S&P 500 and Russell 2000 slipped (-0.6% and -3.0%, respectively), with bond yields rising sharply. Speculative assets like Bitcoin soared, yet concerns over irrational exuberance and elevated inflation risks loom, making inflation-protective securities more appealing. This week, all eyes are on the Federal Reserve, expected to deliver a quarter-point rate cut, aligning with global central banks' easing trends despite the U.S.'s contractionary real interest rate. Investors will also watch key economic reports, including U.S. retail sales and the Fed's preferred inflation gauge, which could influence 2025 rate cut expectations.

Last week saw a 6% surge in the Magnificent 7 stocks and cryptocurrencies, outpacing traditional sectors, while broader markets struggled with more decliners than advancers. The November employment report showed a modest increase of 227,000 jobs, signaling potential for a Federal Reserve rate cut at the upcoming meeting amid softening year-over-year labor market trends. The 10-year Treasury yield ticked slightly lower, while cryptocurrencies soared, with Bitcoin surpassing $100,000 amidst rising enthusiasm. This week, market focus shifts to the November consumer price index report, with a 2.7% year-over-year increase expected to influence trading dynamics.

The markets closed last week with their 53rd record high for 2024, bolstered by strong economic data, including a 2.8% GDP growth rate and the lowest jobless claims in seven months. Key indices like the S&P 500, Nasdaq Composite, and Russell 2000 rose about 1%, while the 10-year Treasury yield dropped significantly. Concerns lingered over President-elect Donald Trump’s proposed tariffs, but traders largely held back from reacting. On the Chicago sports front, the Bears made history by firing Coach Matt Eberflus mid-season. Looking ahead, labor market data, including JOLTS and the November employment report, will be critical as the Fed’s interest rate decision looms.

Last week, markets rallied as the S&P 500 gained 2%, led by Small- and Mid-cap stocks, while tech stocks like Nvidia posted solid but tempered gains. Walmart hit record highs thanks to strong food sales, while Target's dip offers potential for value investors. Cryptocurrency surged alongside Bitcoin nearing $100K, reflecting broader market volatility amid evolving economic policies. Silver emerges as a long-term investment opportunity, balancing its industrial importance in clean energy with short-term market trends.

Key Highlights:

Wall Street had its worst week since early September, as concerns over tariffs, political appointments, and strong economic data dampened expectations for future interest rate cuts. The S&P 500 dropped 2.1%, the Nasdaq fell 3.1%, and the Russell 2000 sank 4%, while higher interest rates boosted the dollar but weighed on gold and crude oil. Despite a global oil and gas glut, midstream energy companies focusing on transport and storage show potential for growth and offer attractive dividend yields. Looking ahead, investors face continued uncertainty with key housing and manufacturing data in focus.

Last week, the stock market saw its strongest rally in over a year, driven by the election results, solid corporate earnings, and a Fed rate cut. The S&P 500 surged 4.7% to its 50th record high of 2024, while the Russell 2000 and Nasdaq also posted substantial gains, with the VIX dropping 31% for its steepest weekly decline since 2021. Former President Trump's electoral victory, along with a GOP win in the Senate, fueled optimism about potential tax cuts and deregulation, benefiting Small Caps, Financials, and energy services stocks. Additionally, China announced a $1.4 trillion plan to support local government debt, which could become increasingly important as we enter 2025.

Last week, markets experienced a downturn driven by mixed earnings reports, economic concerns, and election-related anxieties, with notable declines in tech giants like Microsoft, Meta, and Apple. Despite setbacks in the Information Technology sector, overall third-quarter earnings growth improved, bolstered by positive results in sectors like Communication Services, Health Care, and Consumer Discretionary. Economic data highlighted weaker job growth and potential labor market challenges, while volatility persisted as companies voiced concerns about election impacts on business activities. This week, focus shifts to the U.S. presidential election outcome, Fed interest rate decision, and the final stretch of earnings season.

The stock market ended its six-week winning streak, with the S&P slipping 1% while tech stocks gained modestly. Economic data showed consumer sentiment declined, real estate softened, and corporate earnings were mixed, with Financials and Consumer Discretionary sectors reporting gains while Industrials and Energy sectors faced downward revisions. The yield on the 10-year Treasury rose to a three-month high, impacting equities, while gold hit a new record. This week, Wall Street will closely watch earnings from major tech firms and key economic reports, including the Fed's inflation gauge and the October jobs report.