Buzz on Business for Friday, December 15, 2023

More good economic news on Thursday and stocks and bonds continue to move skyward.

Stock Market Report

Another day, another new all-time high for the Dow Jones Industrials

• They were up 158 points yesterday, that's four-tenths of a percent, on top of Wednesday’s 512-point gain and closed at 37,248.
• The S+P 500 was up 12 points, three-tenths of a percent, and closed at 4,720
• The Nasdaq Composite saw a gain of two-tenths of a percent and closed at 14,762, up 28 points.
• The Retailers had a great day. They gained 2.4% and closed at $71.43, up $1.68

Bond Markets

Bonds also had another really good day, as rates were down across the board. Rates in the middle part of the curve have fallen below four percent, a number we haven’t seen since July.

• The yield on the two-year Treasury is still above four percent, 4.39% to be precise, and that’s down four basis points.
• The twenty-year saw its yield fall by twelve ticks, closing at 4.206%. We’d feel better about the state of the economy if the yield curve would right itself. That’s obviously not going to happen until short-term rates start to fall faster than longer-term rates.

Oil and Gold

• Oil followed through on the bullish reversal we saw yesterday. A barrel was up $1.77 and closed back above seventy at $71.58.
• Gold was up $53.30 and closed at $2,051

The Rally Continues on the Back of Economic Reports.

Markets were still sorting themselves out after the ever-so-minor change in policy from the Federal Reserve on Wednesday. No one would have been surprised if markets had sold off after the run-up they had on Wednesday afternoon. The fact that they followed through and on very high volume is a bullish sign indeed.

They were helped along by the avalanche of good economic news that came out before the opening bell yesterday.

Here’s a sampling:

• Continuous Jobless Claims came in below expectations
• Initial Jobless Claims came in at 202K, well below expectations. The Labor Market continues to be very strong.
• Retail Sales, which have been a bit of a worry, were supposed to be down, but were up, month over month.
• Even a minor stat, “GDP Now,” that we’d never heard of before and which is published by the Atlanta Federal Reserve Bank and attempts to compute the growth in the GDP by an alternative method, came in the way above expectations.
• Even on the earnings side, we’d been watching Costco, the giant retailer, and Lennar, the big home builder, for signs of weakness in those sectors. Both reported after the bell but reported excellent numbers indeed.

It's easy to get excited about the recent market gains, I know we are, but it's always the right time to be cautious. The rise in the market can be attributed to a combination of positive news, the Federal Reserve's optimistic outlook, and a general sense of hopefulness. However, we should remember that market psychology is unpredictable and can change quickly. The inverted yield curve is a warning sign, and there is always the risk of inflation. While it's good to enjoy the current gains, we should also keep an eye on the future. Enjoy the ride, but be prepared for some bumps.