December 13th Market Overview

Happy Friday everyone.

Fed meeting next week sets the tempo for 2025 imo. With inflation data coming in slightly higher then expected it may take awhile to get the rates down. $AVGO blow out earnings looking good for semi’s and tech.

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Let's dig in...

Executive Summary

• S&P 500 and Nasdaq hover near breakeven while Dow attempts to avoid seventh consecutive losing day
  

• Semiconductor sector rips as $AVGO joins trillion-dollar market cap club
  

• Market breadth continues troubling trend, potentially marking longest negative streak since October 2000
  

• Fed meeting next week looms large with 97% probability of rate cut amid sticky inflation concerns
  

Market Overview

Key Market Drivers

1. Semiconductors: $AVGO's strong earnings and AI development partnerships with three major cloud providers reignite tech sector optimism
   

2. Market Breadth Concerns: S&P 500 faces potential 10-day negative breadth streak, longest since October 2000
   

3. Pre-Fed Positioning: Traders adjusting positions ahead of crucial December Fed meeting
   

4. Tech Leadership: Mag Seven stocks showing mixed performance after recent rally, impacting broader market sentiment

Stock Spotlight

• $AVGO: ▲ 25.02% on stellar earnings, AI revenue growth of 220%, and announcement of custom AI chip development
  

• $TSLA: ▲ 2.2% following potential changes to car-crash reporting requirements under Trump administration
  

• $UPST: ▲ 14% after Needham upgrade citing improved funding balance
  

• $PYPL: ▲ 2% following Wolfe Research upgrade with $107 price target
  

• $AMZN: ▼ 0.5% despite Baird raising price target to $260, citing expanding AI contributions

Big Name Updates

• $NVDA ▼ 2% and $META ▼ 1% both giving back recent gains as traders lock in profits ahead of next week's Fed meeting
  

• $AMZN lower by ▼ 0.5% even with Baird talking up their AI and e-commerce strength with a new $260 target
  

• We're seeing some cracks in big tech's market leadership - a theme worth watching as we head into year-end

Other Notable Company News

• $COP trading at levels not seen since July 2023 consolidating around the $100 magnet
  

• $DVN hits lows not seen since September 2021
  

• $CVS reaches lowest levels since December 2012
  

• $ORCL, $ARWR hit new all-time highs

Sector Watch

Bond Market

Treasury yields continue their upward trajectory, with the 10-year note reaching 4.34%, marking its highest level in three weeks. The two-year yield holds at 4.20%, reflecting market expectations for upcoming rate decisions.

The yield curve movement suggests growing uncertainty about the pace of potential rate cuts in 2025.

Policy Watch

Former Dallas Fed president Kaplan notes inflation appears “stuck,” suggesting careful rate management ahead. Markets now price in a 97% probability of a 25-basis-point cut next week, though January pause expectations are increasing following recent inflation data.

Current federal spending levels may necessitate higher rates for longer, according to policy experts. This likely changes with next admin taking over come January.

What to Watch

1. Fed Meeting (December 17-18):

• Market reaction to potential hawkish commentary despite rate cut

• Updated economic projections and dot plot

• Powell’s press conference tone regarding 2025 rate path

2. Market Breadth Development:

• Potential historical significance if negative breadth streak continues

• Impact on year-end market performance

• Sector rotation patterns

3. AI Momentum:

• Follow-through effects from $AVGO's massive earnings

• Cloud provider partnerships and custom chip development

• Impact on broader semiconductor sector

P.S. 

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Thanks for reading 🙂

- John