Market Overview
The S&P 500 Index ($SPX) (SPY) is currently up by +0.32%, the Dow Jones Industrials Index ($DOWI) (DIA) has gained +0.60%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.27%. Additionally, March E-mini S&P futures (ESH26) are up by +0.02%, while March E-mini Nasdaq futures (NQH26) show an increase of +0.08%.
Driving Factors
Stock prices are being buoyed by positive sentiment related to year-end performance and a slight decrease of -1.8 basis points in the 10-year Treasury note yield. Traders remain optimistic due to a strong U.S. economic outlook, bolstered by the announcement that U.S. Q3 real GDP increased by +4.3%, significantly surpassing the expected +3.3%.
Geopolitical Concerns and Commodities
Gold, silver, and platinum have reached new highs today, driven by a weaker dollar and geopolitical tensions, including U.S. strikes in Nigeria and issues regarding Venezuela. The dollar index is showing a slight decline.
U.S. Military Actions
On Thursday, the U.S. engaged in strikes against ISIS targets in Nigeria, collaborating with the Nigerian government amid rising terrorist activities. Additionally, the U.S. Coast Guard redirected the sanctioned oil tanker, Bella 1, away from Venezuela as part of a blockade aimed at vessels linked to the country.
Potential Peace Developments
Ukrainian President Zelensky mentioned potential progress towards a peace agreement with Russia, indicating plans to meet President Trump. Ukraine may be open to a deal involving a demilitarized zone in exchange for security assurances from the U.S. and Europe.
Seasonal Trends and Market Outlook
Historically, December has been a favorable month for stocks, with the S&P 500 rising 75% of the time in the last two weeks since 1928, averaging a +1.3% increase. Current market forecasts estimate an 18% chance of a -25 basis point rate cut in the upcoming FOMC meeting on January 27-28.
Global Market Performance
International markets are on the rise, with the Euro Stoxx 50 closed for Christmas holidays. China’s Shanghai Composite has gained +0.10% for the eighth consecutive day, while Japan’s Nikkei Stock 225 finished +0.68% higher.
