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That’s Five In A Row

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Key Takeaways

  • Markets Keep Running Higher But At Slower Rate
  • Full Economic Calendar This Week With Job In Focus
  • Bitcoin
    BTC
    over $40,000

Markets made it five in a row last week. Both the S&P 500 and Nasdaq Composite gained 0.6% on Friday. For the week, the S&P gained 0.8%, closing at its highest level since March of 2022. Meanwhile, the Nasdaq squeezed out a 0.4% gain. It’s worth noting that while it was another positive week, it was the weakest week of gains in this recent run.

Stock gains came following a week where the S&P 500 had average daily moves of 0.3% in either direction, which was the smallest in six months according to Bloomberg. That lack of action helped keep the VIX down around its lowest levels for the year.

The catalyst behind this move higher is mostly attributable to the economic data being released. Last week’s Personal Consumption Expenditures (PCE) report was right in line with expectations and showed the economy continues growing, albeit at a slower pace. That led to comments on Friday from Jerome Powell that furthered optimism the Fed is done raising rates. In the wake of his comments, the yield on the 2-year note fell, capping off its biggest weekly decline since March and closing at 4.48%. The yield on the benchmark 10-year also fell and closed the week at 4.20%. What I find most interesting about the fall in yields is that the bond market did the Fed’s work earlier this year. Falling bond prices and higher rates in the market made it so the Fed itself didn’t have to raise rates these last months. The question now becomes, will the market again do the work of the Fed by taking rates lower. I’ll be interested to hear what Jerome Powell has to say when the Fed meets a week from this Wednesday.

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This week will feature some pretty big economic data reports. On Monday, the most recent Durable Goods report is scheduled for release. The most recent JOLTs report is due out Tuesday. Then on Friday, we’ll get the monthly jobs numbers. According to Bloomberg, economists are forecasting 180K new jobs created and an unemployment rate of 3.9%, unchanged from last month.

While the pace of gains in the market slowed last week, there’s some encouraging data for how the rest of the year may play out. According to the Stock Trader’s Almanac, since 1950, December has been the 3rd best month of the year with average gains of 1.4%. I’ve also cited data showing how a strong November typically leads to a strong December. While I personally believe markets to be random, if you’re looking for holiday party fodder explaining why you think the market will continue higher through year-end, well, there you go.

For this week, I expect market volume to pick up a bit in light of the employment report and other economic data scheduled for release. I’m also paying attention to chatter out of Washington D.C., as the countdown to a government shutdown will kick off shortly after the beginning of the year. At the same time, I don’t expect to hear much yet because Congress isn’t exactly known for wasting a potential stare down. On the individual stock front, over the weekend Alaska Air agreed to purchase Hawaiian Air in a deal valued at $1.9B. Later this week there will be a couple of interesting earnings announcements. GameStop
GME
is scheduled to report on Wednesday after the close. Then after the close Thursday, Lululemon will report. Also, Spotify announced they would be cutting about 1500 jobs or 17% of its workforce.

Lastly, bitcoin is back up over $40,000. It’s the first time we’ve seen crypto trade this high since the spring of 2022. As always, I would stick with your investing strategy and long-term plans.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.

Source: Fox Business

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