As the latest economic data crosses the wire, Treasury yields are taking an upward trajectory, stirring the markets into a cautious stance. The two-year US yield has hit a striking 4.9%, reflecting a mix of anticipation and anxiety as consumer inflation expectations notch higher, challenging the Federal Reserve’s delicate balancing act. Amidst this financial tightrope walking, the S&P 500 nudges upwards, with tech giants like Apple (AAPL) flirting with valuation milestones and Amazon (AMZN) benefiting from the festive rush, while Nvidia (NVDA) falters post-earnings.
The data paints a complex picture: jobless claims suggest a subtle cooling of the labor market, while a drop in durable goods orders sends a signal of waning business equipment demand. This economic patchwork reinforces the Federal Reserve’s recent "proceed carefully" mantra, as detailed in their latest meeting minutes. Investors, detecting a possible pause in rate hikes, are fueling a rally that's propelled the S&P 500 towards potential record highs next year, buoyed by positive sentiment and sturdy valuations, according to RBC’s (RY) Lori Calvasina.
In the energy sector, oil prices wane as OPEC+ deliberations hit a snag, delaying decisions that could tighten the oil supply and impact prices. Meanwhile, the corporate sector presents a mixed bag: Deere & Co (DE) forecasts a conservative profit outlook, Autodesk (ADSK) faces downgrades, and retailers from Guess? (GES) to Nordstrom (JWN) grapple with underwhelming sales figures.
As market participants navigate through these ripples, the broader indices show resilience, with minor gains in both the S&P 500 (SPY) and the Nasdaq 100 (QQQ). The currency market sees the dollar strengthening, while Bitcoin (BTC) and Ether (ETH) diverge on their paths. With a keen eye on the unfolding economic narrative, investors remain watchful for the Federal Reserve's next chapter in its policy story.
