Markets Reach New Heights as Investors Pour in Cash

The S&P 500 Index ($SPX) (SPY) closed up by +0.56% on Friday, while the Dow Jones Industrials Index ($DOWI) (DIA) rose by +0.42%. The Nasdaq 100 Index ($IUXX) (QQQ) also experienced gains, closing up by +0.90%.

Strong Market Performance Driven by Investors

On Friday, stocks advanced moderately, achieving new all-time highs for the S&P 500 and the Dow Jones Industrials. The drop in bond yields contributed to this uptick, with the 10-year T-note yield falling to a five-week low. This decrease was aided by declining European government bond yields and lower US inflation expectations. A surge in chip stocks was noted after Bloomberg reported that proposed US restrictions on chip technology sales to China might not be as severe as initially thought. Trading on the NYSE ended early at 1:00 PM EST in observance of the holiday.

Historic Cash Inflows Boosting US Equities

Heavy stock purchases have fueled a rally in the S&P 500, the Dow Jones Industrials, and the Nasdaq 100, with investors putting $141 billion into US equities this month. This influx marks the most robust four-week period for inflows on record, based on EPFR Global data.

Market Expectations for Interest Rate Changes

Current market analysis suggests a 66% probability of a -25 basis point rate cut at the upcoming FOMC meeting on December 17-18.

International Market Activity

Mixed results were seen in overseas stock markets on Friday. The Euro Stoxx 50 increased by +0.96%, while China’s Shanghai Composite Index rose by +0.93%. Conversely, Japan’s Nikkei Stock 225 saw a decline of -0.37%.

Interest Rate Updates

December 10-year T-notes (ZNZ24) gained +9 ticks on Friday, and the yield dropped by -8.7 basis points to 4.176%. This performance was buoyed by a rally in European bonds and declining inflation expectations, with the 10-year breakeven inflation rate hitting a 1-3/4 month low of 2.247%. Month-end purchases by bond managers also contributed to rising T-note prices, extending their duration by approximately 0.11 years in November.

European Bond Markets

European government bond yields fell on Friday, with the 10-year German bund yield decreasing to a 1-3/4 month low of 2.082%, closing down by -3.9 basis points to 2.088%. The 10-year UK gilt yield also dropped to a 1-month low of 4.219%, finishing -3.4 basis points lower at 4.242%.

Inflation Observations from the Eurozone

The Eurozone’s November consumer price index (CPI) grew +2.3% year on year, aligning with expectations. However, the November core CPI was reported at +2.7% year on year, slightly below the anticipated +2.8% increase.

Economic Indicators from Germany

German retail sales fell by -1.5% month on month in October, a greater decline than the predicted -0.5%, marking the steepest drop in two years. Unemployment in Germany rose by +7,000 in November, indicating a somewhat stronger labor market than the expected +20,000 increase, with the unemployment rate remaining stable at 6.1%.

Comments from European Central Bank Officials

ECB Vice President Guindos remarked that while inflation data is positive, there are concerns about the overall economic outlook for the Eurozone. ECB Governing Council member Stournaras indicated that if US tariffs lead to a European recession, a more aggressive interest rate policy may be on the table.

Stock Highlights in the US Market

The surge in chip stocks on Friday contributed to broader market gains, following news that proposed US limits on chip technology sales to China may be less severe than initially expected. Notably, Lam Research (LRCX) rose over +3%, while ASML Holding NV (ASML), KLA Corp (KLAC), and Marvell Technology (MRVL) each gained more than +2%. Nvidia (NVDA) also led the Dow Industrials with gains exceeding +2%. Other chip-related stocks like Applied Materials (AMAT), Intel (INTC), NXP Semiconductors NV (NXPI), ON Semiconductor (ON), and Qualcomm (QCOM) saw similar upward trends.

Macau Casino Stocks See Gains

Casinos with operations in Macau benefitted from the easing of visa restrictions in China, leading to gains for Las Vegas Sands (LVS) of over +3%, and increases for Wynn Resorts (WYNN) and MGM Resorts International (MGM) of more than +2%.

Notable Moves in Other Stocks

Boeing (BA) saw a nearly +2% increase following BOA Aviation’s agreement to purchase 14 Boeing 737-8 aircraft. Voyager Therapeutics (VYGR) surged over +18% after Wedbush initiated coverage with a recommendation of outperform and a price target of $11. Meanwhile, Ulta Beauty (ULTA) gained over +3% after Citigroup raised its target price to $390 from $345. Zscaler (ZS) climbed +0.59% as JPMorgan Chase increased its price target from $220 to $240.

Declines in Certain Stocks

MercadoLibre (MELI), heavily reliant on Brazil for revenue, fell over -2% after Brazil’s Finance Minister revealed plans to reduce public spending by 70 billion reals ($11.8 billion) through 2026. Workday (WDAY) dropped more than -1%, compounding Wednesday’s -6% decline after it revised its 2025 subscription revenue forecast to $7.70 billion, slightly below the consensus estimate of $7.72 billion.

Airbnb (ABNB) declined over -1% amid signs of insider selling, as SEC filings revealed CEO Chesky sold more than $15 million in shares. Corteva (CTVA) fell -0.62% for similar reasons, with SEC filings showing General Counsel Fuerer sold $2.39 million in shares. Lastly, Fifth Third Bancorp (FITB) dropped -0.41% after a federal judge permitted customers to pursue a class-action lawsuit claiming they incurred improper deposit account fees.

Earnings Reports Coming Up

Among the companies set to report earnings on December 2, 2024, are Compass Minerals International (CMP), Credo Technology Group Holding (CRDO), Mondee Holdings Inc (MOND), NANO Nuclear Energy Inc (NNE), and Zscaler Inc (ZS).

On the date of publication, Rich Asplund did not hold any positions in the securities mentioned in this article. This information is for informational purposes only. Please review the Barchart Disclosure Policy
here.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.