The S&P 500 Index ($SPX) (SPY) is up +0.74%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.47%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.93%. March E-mini S&P futures (ESH25) are up +0.63%, and March E-mini Nasdaq futures (NQH25) are up +0.85%. The NYSE and Nasdaq will close early today at 1PM Eastern time for the Christmas Eve holiday.
Stocks today are trading higher, building on Monday’s gains that were driven mainly by strength in chip and tech stocks. Chip stocks are seeing continued strength after the Biden administration on Monday announced a trade investigation of Chinese chips, which may pave the way for the incoming Trump administration to slap tariffs on Chinese chips, thus providing trade protection for US chip makers.
China may sell a record 3 trillion yuan ($411 billion) of special Treasury bonds in 2025 to bolster economic stimulus for its economy, according to a report today by Reuters. That would be sharply higher from 1 trillion yuan of bonds sold this year. The news that China may boost its economic stimulus measures was supportive of global stocks.
Stocks are being undercut by today’s +3.4 bp rise in the 10-year T-note yield, which added to yesterday’s large gain of +6.4 bp.
The Philadelphia Fed’s Dec non-manufacturing activity index fell by -0.1 point to -6.0 from -5.9 in November, weaker than expectations for an increase to -2.4.
The Richmond Fed’s Dec manufacturing index rose +4 points to -10 from November’s -14, which was in line with market expectations.
The markets are discounting the chances at 9% for a -25 bp rate cut at the January 28-29 FOMC meeting.
Overseas stock markets today are mixed. The Euro Stoxx 50 today is up +0.10%, snapping a 3-session losing streak. China’s Shanghai Composite Index closed up +1.26%, also snapping a 3-session losing streak. Japan’s Nikkei Stock 225 closed down -0.32%, giving back part of Monday’s +1.19% rally.
Interest Rates
March 10-year T-notes (ZNH25) today are down -4.5 ticks and edged to a new 7-month low. The 10-year T-note yield is up +3.4 bp at 4.621%, and edged to a new 7-month high. T-note prices are seeing continued weakness today after Congress last Friday averted a US government shutdown that would have been negative for the US economy. T-note prices continue to be undercut by supply overhang as the Treasury on Monday sold $69 billion of 2-year T-notes. The Treasury today will sell $70 billion of 5-year T-notes and will sell $44 billion of 7-year T-notes on Thursday.
The German markets are closed today. The 10-year German bund yield on Monday rose +3.8 bp to 2.323%. The 10-year UK gilt yield today rose +2.9 bp to 4.575%.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and an 8% chance for a -50 bp rate cut at that meeting.
US Stock Movers
The Magnificent 7 stocks are showing strength today, led by Tesla (TSLA) with a gain of more than +4%. Amazon (AMZN) and Meta Platforms (META) are up more than +1%.
Chip stocks are leaders in the Nasdaq 100 index again today. Arm Holdings (ARM) is up more than +3%. Broadcom (AVGO), ON Semiconductor (ON), and Marvel Technology (MRVL) are up more than +1%.
Crypto-stocks are trading higher today due to today’s rally of more than +3% in bitcoin (^BTCUSD). Microstrategy (MSTR) is up more than +5% and is at the top of the Nasdaq 100 leaderboard. Riot Platforms (RIOT) is up more than +5%, and Coinbase (COIN) is up more than +3%.
American Airlines (AAL) is down -0.3% but recovered most of its losses in pre-opening trade of more than -5%. American Airlines early this morning grounded all its flights nationwide for about an hour due to a software glitch. The ground halt was lifted at about 7 AM Eastern time this morning.
Starbucks (SBUX) is up +1.9% today even as its workers union said that a barista strike will spread to more than 300 cafes.
Earnings Reports (12/24/2024)
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