Throughout the US trading session, major stock indices displayed a consistent downward trend, with the S&P 500 (SPX), Nasdaq 100 (NDX), and Russell 2000 (RUT) all experiencing similar declines. The Russell 2000 notably lagged behind the others in performance. The majority of sectors ended the day in negative territory, leaving only the Communication Services and Consumer Staples sectors in the green. The Communication Services sector was notably buoyed by a 5.7% increase in Alphabet’s stock (ticker: GOOGL). In sharp contrast, the Real Estate and Technology sectors struggled, with significant drops in shares of semiconductor companies like Nvidia (NVDA) down 2.5%, Micron (MU) down 4.7%, and AMD (AMD) down 2.3%. Overall, the SPX closed down 0.30% at 6,035, while the NDX dropped 0.34% to 21,368, the DJIA fell by 0.35% to 44,248, and the RUT declined by 0.42% to 2,383.
In corporate news, several major financial institutions provided insights into their outlooks. Citi’s CFO indicated that the bank would operate at the high end of guidance for 2024, suggesting resilience in the global economy, with signs of stabilization and recovery in China. Moreover, JPMorgan’s executives conveyed optimism about improved net interest income (NII) forecasts, expecting a significant increase in 2025 NII. They projected that Q4 NII and expenses would perform better than consensus estimates, with investment banking fees anticipated to grow substantially year-over-year. Meanwhile, Walgreens (WBA) was reportedly in negotiations to sell itself to Sycamore Partners, adding to the flurry of M&A activity in the sector.
From an economic data perspective, recent figures reflected a mixed yet cautiously positive trend. The US Redbook Index for the week registered a year-over-year increase of 4.2%, notably down from the previous reading of 7.4%. Meanwhile, revisions for US productivity in Q3 remained steady at 2.2%, aligned with expectations, though unit labor costs were revised down to 0.8%, which was lower than the expected 1.5%. Furthermore, the NFIB Business Optimism Index rose significantly to 101.7 in November, compared to the previous reading of 93.7, suggesting improved sentiment among small businesses ahead of the upcoming Consumer Price Index (CPI) report scheduled for release on Wednesday.
The forex market saw the US dollar (USD) gain strength against most major currencies as news thinly populated the financial landscape prior to the CPI announcement. The US dollar index (DXY) marked its third consecutive session of gains, climbing to highs of 106.63, which was bolstered by weakness in the euro, Swiss franc, Japanese yen, and Australian dollar. Only the British pound and Canadian dollar exhibited strength against the USD in this context. Despite a hotter-than-expected CPI release for Norway, the Norwegian krone (NOK) could not capitalize fully on the news, resulting in mixed performances across G10 currencies.
On the fixed income front, Treasury notes experienced a bear-steepening trend as traders awaited the CPI data and upcoming supply. The NFIB report, while signaling improved business optimism, was contrasted by soft revisions in labor costs, indicating varied underlying economic pressures. The labor market adjustments remained a focal point for market participants as they braced for the potential implications of inflation data on monetary policy decisions.
In commodities, oil prices reflected marginal gains throughout the session, although they retreated by the time of settlement. This relative strength in oil prices followed a generally positive sentiment that had been building since a favorable outlook from Chinese policymakers. The US Energy Information Administration (EIA) provided an updated global oil demand forecast for 2024, predicting an increase to 103.03 million barrels per day, up from a prior estimate of 102.6 million barrels per day. Additionally, crude oil inventory figures revealed an unexpected increase in crude stocks, complicating the market’s outlook as traders weigh supply dynamics against demand expectations.