Quiver Quantitative - As the latest economic data crosses the wire, Treasury yields are taking an upward trajectory, stirring the markets into a cautious stance. The two-year US yield has hit a striking 4.9%, reflecting a mix of anticipation and anxiety as consumer inflation expectations notch higher, challenging the Federal Reserve’s delicate balancing act. Amidst this financial tightrope walking, the S&P 500 nudges upwards, with tech giants like Apple (NASDAQ:AAPL) flirting with valuation milestones and Amazon (NASDAQ:AMZN) benefiting from the festive rush, while Nvidia (NASDAQ:NVDA) falters post-earnings.
The data paints a complex picture: jobless claims suggest a subtle cooling of the labor market, while a drop in durable goods orders sends a signal of waning business equipment demand. This economic patchwork reinforces the Federal Reserve’s recent "proceed carefully" mantra, as detailed in their latest meeting minutes. Investors, detecting a possible pause in rate hikes, are fueling a rally that's propelled the S&P 500 towards potential record highs next year, buoyed by positive sentiment and sturdy valuations, according to RBC’s (RY) Lori Calvasina.
In the energy sector, oil prices wane as OPEC+ deliberations hit a snag, delaying decisions that could tighten the oil supply and impact prices. Meanwhile, the corporate sector presents a mixed bag: Deere & Co (NYSE:DE) forecasts a conservative profit outlook, Autodesk (NASDAQ:ADSK) faces downgrades, and retailers from Guess? (GES) to Nordstrom (NYSE:JWN) grapple with underwhelming sales figures.
As market participants navigate through these ripples, the broader indices show resilience, with minor gains in both the S&P 500 (SPY) and the Nasdaq 100 (QQQ). The currency market sees the dollar strengthening, while Bitcoin (BTC) and Ether (ETH) diverge on their paths. With a keen eye on the unfolding economic narrative, investors remain watchful for the Federal Reserve's next chapter in its policy story.
This article was originally published on Quiver Quantitative