Investors largely dismissed superstitions surrounding Friday the 13th, with U.S. stock markets experiencing minimal fluctuations as attention remained fixed on the upcoming Federal Reserve meeting scheduled for Wednesday. The relatively calm trading day reflects a sense of anticipation and cautious optimism as market participants await signals regarding the future direction of monetary policy.
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Major Indices Show Mixed Performance
The S&P 500 index remained virtually unchanged, dipping a mere 0.16 points to close at 6,051.09. This minor dip concluded a three-week winning streak, resulting in a 0.6% weekly decline. The Dow Jones Industrial Average, however, experienced a more pronounced downturn, falling 86 points (0.2%) to 43,828.06. This marked the seventh consecutive day of losses for the Dow, its longest losing streak since 2020, and culminated in a substantial 1.8% weekly decline – the largest since October. In contrast, the tech-heavy Nasdaq Composite bucked the trend, edging up 0.12% or 23.88 points to finish at 19,926.72, though still below its record high of 20,061.65 set earlier in the week. The Nasdaq posted a 0.3% gain for the week.
Fed Decision and Inflation Concerns Take Center Stage
The Federal Reserve’s final policy meeting of the year concludes on Wednesday, and its outcome holds significant sway over market sentiment. While market expectations, as reflected by the CME Fed Watch tool, point to a 97% probability of a quarter-point reduction in the federal funds rate (to a range of 4.25% to 4.5%), the outlook for 2025 remains less certain. Recent inflation data, exceeding expectations, has introduced a note of caution, leading many economists to anticipate a pause in rate cuts in January. KPMG Chief Economist Diane Swonk observed that “Improvements in inflation appear to have stalled.”
Annual consumer inflation rose for the second consecutive month, reaching 2.7% in November – the highest level since July. Core inflation, excluding volatile food and energy prices, held steady at 3.3%. Both measures remain above the Fed’s 2% target. Further reinforcing inflationary pressures, wholesale prices increased by 3% annually, and 3.5% excluding food and energy, marking the highest levels since February 2023.
Treasury Yields Climb Amidst Inflation Worries
Concerns over persistent inflation have driven U.S. government debt yields higher for five consecutive sessions, reaching multi-week highs. The benchmark 10-year Treasury yield surpassed 4.4%, while the 2-year yield stood at 4.247% on Friday.
Big Tech Maintains Momentum Despite Market Uncertainty
Despite broader market anxieties surrounding inflation, major technology companies, including Apple, Nvidia, Microsoft, Amazon, Meta Platforms (formerly Facebook), Alphabet (Google’s parent company), Broadcom, and Tesla, have largely maintained their upward trajectory. Several of these companies reached record highs this week, although Friday saw mixed performance. Tesla’s record close earlier in the week marked its first in over three years, fueled by CEO Elon Musk’s perceived positive relationship with President-elect Donald Trump. Tesla shares have surged approximately 65% since the election.
Broadcom experienced a particularly noteworthy surge, with its shares jumping over 24% on Friday, propelling the company’s valuation to an impressive $1 trillion. This remarkable gain followed Broadcom’s projection of a substantial increase in demand for artificial intelligence (AI) chips. CEO Hock Tan estimated a potential $60 billion to $90 billion revenue opportunity in the AI sector by 2027, representing more than four times the current market size. Broadcom also issued a first-quarter revenue forecast exceeding analyst estimates. This positive outlook underscores the continued strength and growth potential of the technology sector, even amidst broader economic uncertainties.
In conclusion, while Friday the 13th may have evoked some superstitious anxieties, the U.S. stock market remained relatively steady, with investors focused on the upcoming Federal Reserve meeting and its implications for future monetary policy. Concerns about persistent inflation continue to influence market dynamics, driving Treasury yields higher. However, the technology sector remains a bright spot, demonstrating resilience and significant growth potential, particularly in areas like artificial intelligence.
