Buzz on Business for Tuesday, December 5th, 2023

On Monday, the stock marketthemselves  sold off, primarily led by tech stocks on above-average volume. Investors found questioning whether this was a temporary setback or a sign of a larger shift. Several factors were at play, including the impact of rising interest rates and a notable report from JP Morgan that took a pessimistic stance on the market's future. Let's break down the key events and their implications.

Market Recap

• The Dow Jones Industrials: The Dow lost 41 points, roughly a tenth of a percent, closing at 36,204.
• The S+P 500: The S+P 500 experienced a half-percent decline, translating to a 25-point drop, concluding at 4,570.
• The Nasdaq Composite: The Nasdaq faced the most significant hit, plummeting by 120 points, over 8/10ths of a percent, and closing at 14,185.
• The XRT (S+P Retail ETF): Interestingly, the retail sector defied the trend, with the XRT gaining 1.10%, closing at 67.79.

Interest Rates

• The two-year Treasury yield rose to 4.635%, up by nine basis points.
• The twenty-year Treasury saw a marginal increase, closing with a yield of 4.856%.

Commodities

• Oil: Continuing its downward trend, oil dropped by $1.12, closing at $73.23.
• Gold: Gold had a volatile day, reaching an all-time high of $2,152 before closing at $2,042. The potential bearish signal of a higher high with a lower close was noted.

JP Morgan's Pessimistic Report

JP Morgan released a notably pessimistic report last week, attracting attention on Monday. The report, authored by the Chief Global Equity Strategist, painted a bleak picture of the market, citing high-interest rates, consumer credit constraints, and depleted savings. The strategist predicted a substantial decline, stating, "The S+P 500 could fall to 4200 by the end of 2024."

Analyzing the Analysis

I took a look at his track record and found a clip of him on TV back in August, and he was saying the exact same thing then. The only difference was that the S+P was falling to 3500 then. To be fair, stocks did fall through the summer and early fall before heading skyward over the course of the last two months. So, he’s back on TV, I have no idea why.

In the dynamic world of finance, predicting market movements remains, at best, a challenge. At worst, and much more likely, a guessing game.