Market Overview
The S&P 500 Index ($SPX) (SPY) remains stable, while the Dow Jones Industrials Index ($DOWI) (DIA) has risen by +0.09%. Conversely, the Nasdaq 100 Index ($IUXX) (QQQ) shows a minor decline of -0.06%. The March E-mini S&P futures (ESH26) have increased by +0.02%, while the March E-mini Nasdaq futures (NQH26) have dropped by -0.02%.
Economic Outlook
Stock indices are relatively flat ahead of today’s early market closure at 1 PM ET and tomorrow’s Christmas holiday. Investor sentiment is buoyed by optimism regarding the U.S. economic prospects, bolstered by the news that the U.S. Q3 real GDP grew by +4.3% on a quarter-over-quarter annualized basis, outpacing market predictions of +3.3%. However, other economic indicators released on Tuesday were less favorable, particularly the Conference Board’s December consumer confidence index, which fell by -3.8 points to 89.1, down from a revised November figure of 92.9 and trailing market expectations of 91.0.
Job Claims Report
Recent data revealed that initial unemployment claims in the U.S. declined by -10,000 to 214,000 for the week ending December 20, indicating a stronger labor market than the anticipated 224,000. However, continuing claims increased by +38,000 to 1.923 million, up from the previous week’s revised 1.885 million, suggesting a weaker labor market than expected.
China’s Monetary Policy
The People’s Bank of China released a cautious statement following its quarterly monetary policy meeting, emphasizing its commitment to long-term stability. They indicated that they would avoid abrupt interest rate cuts to tackle issues like property market weaknesses and weak domestic demand amid a trade dispute with the U.S.
Seasonal Trends
Seasonal trends appear favorable for stock performance. Data from Citadel Securities shows that since 1928, the S&P 500 has risen 75% of the time in the last two weeks of December, with an average increase of 1.3%. Currently, the markets are pricing in a 13% chance of a -25 basis point rate cut at the upcoming FOMC meeting scheduled for January 27-28.
Global Market Performance
International stock markets showed mixed results today, with the Euro Stoxx 50 down by -0.05%. China’s Shanghai Composite posted a +0.53% gain, marking its sixth consecutive daily rise, while Japan’s Nikkei 225 dipped by -0.14%.
US Interest Rates
March 10-year T-notes (ZNH6) saw an increase of 2.5 ticks, with the yield down by -0.8 basis points at 4.155%. T-note prices are slightly elevated despite an oversupply condition from the Treasury’s sale of $44 billion in 7-year T-notes. European government bond yields have also decreased, with the 10-year German bund yield down -3.6 basis points to 2.862%.
