December 14, 2024 Market Update

This week the Dow Jones fell 1.82%, marking its longest losing streak since February 2020, partly due to a continued plunge in UnitedHealth (UNH) shares following the tragic shooting of its CEO, while the S&P 500 slipped nearly 0.64% for the week.  In contrast, the Nasdaq Composite gained 0.34%, driven by strength in key technology stocks.

Broadcom, a semiconductor manufacturer rapidly gaining traction in the AI industry, surged 24% on Friday to become the ninth U.S. company with a $1 trillion market cap, while Tesla hit a new record high. 

The Consumer Price Index (CPI) increased by 2.7% in November compared to the same period last year, slightly above October's 2.6% rise but consistent with expectations.  On a “core” basis—excluding the more volatile categories of food and gas—the index rose by 0.3% for the month and 3.3% year-over-year.   The producer price index, released on Thursday reported the prices that manufacturers pay for supplies rose by 3% from a year earlier.

While inflation is well off the 40-year high it saw in mid-2022, it remains above the Fed’s 2% annual target.  But that probably isn't enough of a concern to keep the Federal Reserve from cutting its interest-rate target when it meets next week.  Mr. Market puts the odds of another 25 basis point reduction at a near certainty.

Key highlights from the CPI report include:

• Shelter costs: The shelter index, a measure of housing costs, slowed to a 4.7% annual increase in November, down from 4.9% in October.

• Food prices: The food index rose by 2.4% year-over-year, with a 0.4% increase in November alone.

• Used car prices: Prices for used cars jumped 2% during the month, driven by higher prices at auto auctions.

While next week's Fed decision is unlikely to be surprising, the path for monetary policy is less clear.  Uncertainties surrounding the potential inflationary impact of President-elect Trump's policies, should they take effect, could lead to an unexpected change in the Fed’s course.

That’s all for now.  Have a great weekend and invest wisely my friends.