To The Moon

Previous Session

The trading session commenced with the $S&P 500(.SPX)$ briefly reaching a new record high before experiencing a slight downturn in the afternoon, ultimately rallying back to close flat. Both the Dow Jones Industrial Average and the $NASDAQ(.IXIC)$ exhibited marginal movements, each changing less than 0.1%.

Key Events of the Day

The highlight of the day was the release of December inflation data. The Consumer Price Index (CPI) rose by 0.3% last month, slightly surpassing expectations. The core CPI, excluding food and energy components, also increased by 0.3% in December. Year-over-year, both indices showed faster increases, reaching 3.4% and 3.9%, respectively. Despite these numbers, the longer-term trend still supports an overall disinflation theme, aligning with the Federal Reserve's stance.

CPI

BofA Securities U.S. economist Stephen Juneau noted that the report suggests a cooling of inflation, with core inflation on a three-month annualized rate and year-over-year rate showing a slight decline. BofA economists maintain their expectation of no change in interest rates at the upcoming Fed meeting, followed by a quarter-point cut in March, in line with current futures market pricing.

Market scenario

Market expectations continue to factor in a year-end federal-funds rate between 3.75% to 4%, compared to the current 5.25% to 5.5%. The anticipation of key economic data, including inflation and employment figures, will play a significant role in shaping market sentiment.

Rate Cut

In Thursday's trading session, U.S. equities closed mostly flat, with the S&P 500 slightly down (-0.07%) and the Russell 2000 (small caps) showing a decline of -0.75%. Technology and energy sectors outperformed the broader market, while utilities and real estate lagged. Salesforce and Nike led the Dow higher, while Verizon and Walgreens were the worst performers.

The Nasdaq remained unchanged, and the "FAAMG" stocks (Meta, Amazon, Apple, Microsoft, Alphabet) exhibited mixed performances.

$Microsoft(MSFT)$ briefly surpassed $Apple(AAPL)$ to become the world's largest company by market value, reflecting the ongoing competition between the two tech giants, influenced by the boom in artificial intelligence.

$Alphabet(GOOG)$ implemented job cuts aimed at improving efficiency, affecting several hundred positions across the company.

The VIX, measuring market volatility, edged down 1.97% to 12.44. Treasury yields for the 30-year and 10-year bonds finished at 4.187% and 3.982%, respectively, while the 2-year yield ended at 4.266%.

US Int Rates

The next few weeks are expected to revolve around fourth-quarter earnings reports. The earnings season kicks off with results from major financial institutions such as $Bank of America(BAC)$ , Citigroup, and JPMorgan Chase. This period will likely influence market dynamics and provide insights into the financial health of various sectors.

*Note: The market information provided is for informational purposes only. Investors should conduct their research and consider their risk tolerance before making investment decisions.

Disclaimer: The market outlook is subject to change based on evolving economic indicators and geopolitical developments.

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