Mid-Week Market Minute 12.18.24

Stocks Lower; GDP, PCE Price Data This Week

Stocks were mostly lower in early trading this week ahead of the highly anticipated Fed meeting on Wednesday afternoon. Notably, Tuesday marked the ninth consecutive “down day” for the widely followed Dow Jones Industrial Average, marking the longest losing streak for the index since 1978. However, the declines have been modest and given the unique construction of the 30-stock price-weighted index, individual names can have outsized impacts on index returns. For example, shares of United Health represent more than 8% of the index and are responsible for roughly half the drop in the index over the past couple of weeks. Despite the recent declines, the index sits less than 4% off all-time highs, while the S&P 500, a better proxy for the broader U.S. stock market, is less than 1% from all-time highs.

In bonds, yields moved higher this week ahead of the Federal Reserve’s final policy-setting meeting for 2024. Despite a near consensus view the central bank will enact an additional quarter-point rate cut at Wednesday’s meeting, bond yields have been adjusting to the idea additional rate cuts over the next year are likely to be few and far between. The yield on the 2-year and 10-year Treasury notes are currently trading around 4.23% and 4.40%, respectively.

On the data front, Thursday will bring the final estimate of third-quarter real GDP growth, which is expected to remain unrevised from the original estimate of 2.8%. In addition to GDP numbers, investors will keep an eye on jobs and housing data on Thursday as well. Rounding out the week will be key inflation data in the form of the PCE Price Index on Friday. Core prices are expected to show a 0.2% increase for the month of November, which would leave year-over-year prices higher by 2.5%.

Source: GSAM, CNBC, JPMorgan, FactSet

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