Presented by Mark Gallagher
Year-over-year inflation ticked up in November, matching economist expectations. The Nasdaq Composite led the way despite mixed performance from the so-called Magnificent Seven. The Federal Reserve (Fed) will host its December meeting on Wednesday in the wake of multiple interest rate cuts in Europe.
Quick Hits
- Report releases: Year-over-year inflation ticked up in November, matching economist expectations.
- Financial market data: Innovation from Broadcom and Tesla was not enough to lift the S&P 500 into positive territory.
- Looking ahead: Economic news will be highlighted by Wednesday’s meeting of the Federal Open Market Committee (FOMC).
Keep reading for an in-depth look.
Report Releases—December 9–13, 2024
N.Y. Fed Survey of Consumer Expectations (Monday)
The survey showed that 1-, 3-, and 5-year yields each increased 0.1 percent, to 3 percent, 2.6 percent, and 2.9 percent, respectively.
NFIB Small Business Optimism: November (Tuesday)
The index jumped 8 points to 101.7 after being below the 50-year average of 98 for 34 months.
Consumer Price Index (CPI): November (Wednesday)
Year-over-year consumer inflation ticked up, which was in line with economist and market expectations.
-Prior monthly CPI/core CPI growth: +0.2%/+0.3%
-Expected monthly CPI/core CPI growth: +0.3%/+0.3%
-Actual monthly CPI/core CPI growth: +0.3%/+0.3%
-Prior year-over-year CPI/core CPI growth: +2.6%/+3.3%
-Expected year-over-year CPI/core CPI growth: +2.7%/+3.3%
-Actual year-over-year CPI/core CPI growth: +2.7%/+3.3%
Producer Price Index (PPI): November (Thursday)
Headline and core producer inflation increased more than expected on a year-over-year basis.
-Prior monthly PPI/core PPI growth: +0.3%/+0.3%
-Expected monthly PPI/core PPI growth: +0.2%/+0.2%
-Actual monthly PPI/core PPI growth: +0.4%/+0.2%
-Prior year-over-year PPI/core PPI growth: +2.6%/+3.4%
-Expected year-over-year PPI/core PPI growth: +2.6%/+3.2%
-Actual year-over-year PPI/core PPI growth: +3.0%/+3.4%
The Takeaway
-Consumer inflation expectations and small business optimism improved.
-Although consumer inflation was mostly in line with expectations, producer inflation surprised slightly to the upside.
Financial Market Data
Equity
| Index | Week-to-Date | Month-to-Date | Year-to-Date | 12-Month |
| S&P 500 | –0.61% | 0.37% | 28.54% | 30.33% |
| Nasdaq Composite | 0.36% | 3.73% | 33.68% | 36.30% |
| DJIA | –1.78% | –2.30% | 18.43% | 20.36% |
| MSCI EAFE | –0.72% | 0.99% | 7.89% | 12.36% |
| MSCI Emerging Markets | 0.80% | 3.29% | 11.65% | 17.65% |
| Russell 2000 | –2.55% | –3.54% | 17.26% | 22.20% |
Source: Bloomberg, as of December 13, 2024
The Nasdaq Composite led U.S. major averages despite mixed performance from so-called Magnificent Seven stocks. Top contributors included Tesla, Alphabet, Apple, and Microsoft. Conversely, Nvidia and Meta Platforms were among the top detractors for the S&P 500. Consumer discretionary, communication services, and technology were among the top performing sectors, with innovation from Tesla’s Robotaxi and Alphabet’s quantum computing chip driving these moves. Lagging sectors included health care, financials, and industrials.
Fixed Income
| Index | Month-to-Date | Year-to-Date | 12-Month |
| U.S. Broad Market | 0.95% | 2.36% | 3.67% |
| Nasdaq Composite | 0.90% | 1.53% | 2.75% |
| DJIA | 0.88% | 2.30% | 3.61% |
| MSCI EAFE | 0.68% | 2.14% | 3.72% |
Source: Bloomberg, as of December 13, 2024
The Treasury yield curve continued to steepen as the front end of the curve moved down on broad expectations of a 25 basis point (bps) cut at December’s Fed meeting, along with recent cuts by the European Central Bank and Swiss National Bank. The 5-year and beyond saw notable steepening with higher yields after a slightly hotter-than-expected PPI report and strong small business confidence.
The Takeaway
-The Nasdaq Composite led the way despite mixed performance from Magnificent Seven stocks.
-The steepening yield curve is worth monitoring as an improving growth outlook comes at the cost of more expensive long-term financing.
Looking Ahead
In the final full week before the holiday break, the focus will be on inflation. We expect data on retail sales, housing, and personal income and spending. The highlight will be Wednesday’s FOMC decision.
-Tuesday kicks off with retail sales for November. Headline and core retail sales are set to grow.
-On Wednesday, the FOMC will make its interest rate decision for December. The Fed is expected to lower the range of the federal funds rate 25 bps after its meeting.
-On Thursday, existing home sales for November will be released; the pace is expected to rise for the second consecutive month.
-Finally, on Friday, personal income and spending for November will be released. Both are expected to continue growing.
Disclosures: This material is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent. One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.
Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com
Authored by the Investment Research team at Commonwealth Financial Network.
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