Markets Overview
- ASX SPI 200 futures up 0.8% to 8,530.00
- Dow Average down 0.2% to 44,834.66
- Aussie down 0.6% to 0.6471 per US$
- US 10-year yield rose 2.4bps to 4.1936%
- Australia 3-year bond yield rose 1.8 bps to 3.93%
- Australia 10-year bond yield fell 0.5 bps to 4.33%
- Gold spot down 0.2% to $2,637.66
- Brent futures little changed at $71.86/bbl
Economic Events
- 11:30: (AU) 3Q Net Exports of GDP, est. 0.3, prior 0.2
- 11:30: (AU) 3Q BoP Current Account Balance, est. -A$10.9b, prior -A$10.7b
A rally in the world’s largest technology companies drove stocks to fresh all-time highs, with Wall Street traders bracing for a barrage of economic data and remarks from Federal Reserve speakers that will help shape the outlook for interest rates.
The S&P 500 notched its 54th closing record this year in a “narrow” advance that saw just a few groups ending higher. The tech-heavy Nasdaq 100 rose more than 1%, Tesla Inc. led gains in megacaps and Apple Inc. hit a fresh peak. Treasuries pared losses after Fed Governor Christopher Waller said he’s inclined to vote for a rate cut in December, with swaps pricing in more than 70% of a quarter-point reduction this month.
Even after the strongest rally since the early days of the dot-com boom, the S&P 500 still has room to push higher, according to JPMorgan Chase & Co.’s Andrew Tyler. He says the most popular options trades are wagering the benchmark will hit 6,200 to 6,300 this month. The gauge ended Monday just shy of 6,050.
The highlight this week will be Friday’s payrolls report, which is expected to show US hiring jumped in November after hurricanes and a major strike undercut job growth a month earlier. On Wednesday, Fed Chair Jerome Powell participates in a moderated discussion, and investors will await any assessment of the job market and inflation as well as clues to whether the central bank will lower rates in December.
“This week is the last truly important economic-data week of 2024,” said Tom Essaye at The Sevens Report. “If results are ‘Goldilocks,’ then investors will expect a soft landing and a December rate cut. That will keep positive seasonals in place for a year-end grind higher.”
The S&P 500 added 0.2%. The Nasdaq 100 rose 1.1%. The Dow Jones Industrial Average fell 0.3%.
Treasury 10-year yields advanced two basis points to 4.19%. The dollar snapped a three-day losing streak amid a currency warning to BRICS nations by President-elect Donald Trump. French bonds and stocks came under renewed pressure after Marine Le Pen pledged to topple Prime Minister Michel Barnier’s government after he failed to meet her demands on a new budget.
A year ago, equity investors and strategists braced for a potentially turbulent 2024, worrying about the risk of a hard landing for the US economy and rate cuts that could come too late to prevent it. Heading into the year, few anticipated that the S&P 500’s annual gain would be among the best in history.
“We now find ourselves in the middle of this ‘Goldilocks’ zone, where economic health supports earnings growth while remaining weak enough to justify potential Fed rate cuts,” said Mark Hackett at Nationwide. “December continues the seasonal tailwind, historically delivering the second-best performance behind November. Other technical tailwinds for the market include financial conditions, sentiment, momentum, and breadth.”
To Sam Stovall at CFRA, after the big November gains, investors still have much to look forward to.
Since World War II, he says the S&P 500 returns in December recorded: 1) the second highest average monthly return 2) the greatest frequency of advance and 3) the lowest standard deviation of returns, which during election years has been nearly 40% below the average for the 11 other months of the year.
“The trends in the equity market remain constructive,” said Craig Johnson at Piper Sandler. “We expect a continued broadening into SMID-caps, which should be a rising tide that lifts all boats.”
