...Dow jumped +879pts intraday before pared back to +498pts higher , closing the week lower by -2.25%
...S&P500 +1.09% to 5,930 and Nasdaq +1.07%
...after the 'Grinch' Powell stole Xmas, he sent his minions to soothe the markets- Fed's Goolsbee indicated that the Fed funds rate is still higher than the neutral rate implying room for cuts on the day PCE surprised to the downside.
...bears got blindsided just as bulls got woken up from their complacency; don't be bull or bear.
...Powell's unexpectedly hawkish comments may well be intended to cool down market exuberance especially in the crypto space, and on that he has been highly successful. Without Powell, BTC was on course for higher highs leading at least into inauguration.
...unfortunately despite this rebound, the market now enters 2025 with a renewed sense of foreboding rather than carried away optimism (albeit unfounded) and many has been hurt in the momentum trade. Wall Street leaps, cutting losses after a dismal week Stan Choe
Dec 21, 2024 – 5.40am
New York | US stocks are rallying Friday to more than halve their losses in what had been one of their worst weeks of the year.
The S&P 500 jumped 1.8 per cent and was on track for its best day in six weeks. The Dow Jones Industrial Average was up 761 points, or 1.8 per cent, as of 11:45 a.m. Eastern time, and the Nasdaq composite gained 1.8 per cent.
Eli Lilly was one of the strongest forces lifting the market after a rival, Novo Nordisk, gave an update on a potential weight-loss treatment that analysts said fell short of expectations. That could benefit Eli Lilly, whose Zepbound helps treat obesity, and its stock climbed 5.1 per cent.
Novo Nordisk plunged 20.8 per cent on European markets after the Danish drugmaker revealed disappointing results in a late-stage trial for its experimental next-generation obesity drug CagriSema, wiping as much as $US125 billion off its market value.
The biggest push upward came from superstar stock Nvidia, which rose with the broad market after a report said a measure of inflation the Federal Reserve likes to use was slightly lower last month than economists expected. It’s an encouraging signal following recent reports suggesting inflation may be tough to get all the way down to the Fed’s 2 per cent goal from its peak above 9 per cent.
The threat of higher inflation was one of the reasons Fed Chair Jerome Powell gave this week when the central bank hinted it may deliver fewer cuts to interest rates next year than it earlier expected.
That warning sent a shock through the stock market, which had run to all-time highs on the widespread assumption that the Fed would deliver a string of cuts to rates in 2025. Now traders are largely betting on one, two or perhaps even zero, according to data from CME Group.
“When optimism is rising and market multiples are expanding, it just takes a little fear to take the veneer off a market rally,” according to Brian Jacobsen, chief economist at Annex Wealth Management.
Friday’s better-than-expected inflation data pushed traders to trim their bets for zero cuts in 2025, which they now collectively see a 15 per cent chance of.
Critics had been warning stock prices were vulnerable to drops after running so high, and they likely needed everything to go correctly to justify their stellar gains for the year so far. Besides the diminished hopes for several rate cuts next year, Wall Street got another reminder late Thursday that everything may not go as expected.
The US stock market has lost a chunk of its gain since Trump’s win on Election Day raised hopes for faster economic growth and more lax regulations on companies, which would boost corporate profits. Worries have risen that Trump’s preference for tariffs and other policies could lead to higher inflation, a bigger US government debt and difficulties for global trade.
“Next year will be a time of huge challenges to the world economy,” High Frequency Economics’ Carl B. Weinberg wrote in a note to clients, citing US political uncertainty, expected global trade wars and geopolitical uncertainty. “We do not look forward to these changes.”
On the losing end of Wall Street was US Steel, which sank 3.4 per cent after saying its fourth-quarter results will likely come in below its earlier forecast. CEO David Burritt said steel prices remain depressed.
Novo Nordisk’s stock that trades in the United States lost roughly a fifth of its value, 20.7 per cent, after the update on CagriSema, its potential treatment for adults with obesity.
Nike’s stock slipped 0.1 per cent despite reporting a better profit for the latest quarter than analysts expected.
Analysts said changes by Nike’s new CEO, Elliott Hill, to turn around the company will likely cut into financial results in the near term to drive better long-term growth. The company is likely to cut prices to clear its warehouses of old products, for example, and open space for a new wave of innovation.
They were the exceptions. Nearly every stock in the S&P 500 was rising, at 98 per cent. Among them were cruise lines after Carnival steamed past analysts’ expectations for profit in the latest quarter.
CEO Josh Weinstein said it’s seeing strong demand and expects growth to continue into 2025 thanks in part to higher fares. Carnival climbed 5.3 per cent. Rivals Norwegian Cruise Line and Royal Caribbean both rose at least 4.1 per cent.
In the bond market, Treasury yields eased.
The yield on the 10-year Treasury sank to 4.49 per cent from 4.57 per cent late Thursday.
Europe’s STOXX 600 clocked its second straight weekly fall on Friday, with the healthcare sector leading losses thanks to Novo Nordisk.
UK’s FTSE 100 touched an over one-month low on Friday, led by declines in personal goods and bank shares, with the main stock index on track for its sharpest drop since August 2023 for the week marked by a raft of central bank policy decisions.
