December 17th Market Overview

Happy Tuesday everyone.

The Dow heads for its ninth consecutive decline - a streak not seen since 1978.

Strong retail sales data showing some bullish Christmas spirit in the consumer spending sector. Market breadth continues to deteriorate.

A personal ask from me - each time someone checks out today’s sponsor it buys me a sip of coffee.

Let's dig in...

Executive Summary

• Dow Jones tracking for longest losing streak since February 1978, with only 40.6% of S&P 500 stocks trading above their 50-day moving average
  

• Retail sales outperformed with 0.7% November growth against 0.6% estimates, signaling persistent consumer strength
  

• Tech sector maintains resilience amid broader market weakness, with $TSLA and $AMZN leading gains
  

• Markets cautiously position ahead of tomorrow’s Federal Reserve decision, with 95% probability of a rate cut
  

Market Overview

Key Market Drivers

1. Strong Retail Performance: November sales exceeded expectations at 0.7% monthly growth, demonstrating consumer resilience
   

2. Technical Deterioration: Market breadth continues weakening with S&P 500’s advance-decline line falling for 11 straight sessions
   

3. Policy Anticipation: Markets position ahead of Fed’s final 2024 meeting, with focus shifting to 2025 rate path
   

4. Trump Policy Impact: Growing attention to potential effects of proposed tax and tariff policies on markets

Stock Spotlight

• $TEVA ▲ 26.8%: Surged on positive Phase 2b results for inflammatory bowel disease treatment developed with Sanofi
  

• $TSLA ▲ 2.3%: Mizuho upgrade to outperform with $515 target, citing potential benefits from Trump administration policies
  

• $NVDA: Faces pressure as Chinese regulators launch probe into 2020 Mellanox acquisition
  

• $PFE ▲ 4.0%: Gains on inline 2025 guidance and additional $500M cost savings plan
  

• $AMZN: Announces $10B Ohio investment for AWS expansion, bringing total state commitment to $23B

Big Name Updates

• $META: Threads platform reaches milestone with 100M daily active users, 300M monthly active users
  

• $GOOGL: Waymo expanding internationally with Tokyo self-driving vehicle testing planned for early 2025
  

• $BABA: Will sell inTime department store for $1B

Other Notable Company News

• $NET: Stifel upgrades to Buy with $136 target, citing sustained growth potential
  

• $HIMS: Morgan Stanley initiates coverage with Overweight rating, projects 30% revenue CAGR (Compound annual growth rate)
  

• $AFRM: Offering $750M convertible notes while announcing $300M share buyback
  

• $EBAY: Approves additional $3B stock repurchase program (what a great ticker)
  

• $NUE ▼: Lowers Q4 EPS guidance to $0.55-$0.65, below $0.87 consensus

Sector Watch

Bond Market

Treasury yields show mixed movement ahead of the Fed decision. The 10-year yield holds at 4.38% while the 2-year settles at 4.27%.

Bank of America’s CEO projects an end-state Fed Funds rate between 3.5-4% range, suggesting potential yield curve impacts.

Policy Watch

• Federal Reserve expected to deliver first rate cut with markets pricing 95% probability, though only 63% believe it’s the right move (CNBC survey)
  

• China maintains 5% growth target for 2025 while increasing budget deficit to 4% of GDP
  

• Growing concerns about inflationary impact of incoming administration’s policies, with 67% of survey respondents seeing them as inflationary
  

• Chinese regulators expanding scrutiny of U.S. tech acquisitions following $NVDA investigation
  

What to Watch

1. Fed Decision Factors:

• Market reaction to rate decision and 2025 guidance

• Survey shows recession probability at two-year low of 29%

• GDP forecasts at 2.5% for 2024, cooling to 2.1% in 2025

2. Inflation Concerns:

• 56% see Trump administration policies as “somewhat inflationary”

• Focus on potential impact of tariffs and fiscal policies

• Labor market tightness affecting inflation outlook

3. Policy Implementation:

• 70% expect 10% additional tariffs on China

• Two-thirds believe 25% Mexico/Canada tariffs depend on negotiations

• Market response to this week’s monetary policies following final fed meeting tomorrow.

Thanks for reading 🙂

- John