Daily Market Report December 11th, 2024
In another sign of near-term weakness in the market, the S&P underwent its first back-to-back losses in nearly a month and the Dow declined for the sixth time in the past seven sessions, so things are showing signs of investors taking profits in many of the stocks that have led the strong rally this year.
The Dow fell again, this time by 154 down to 44,247 as this time the losers were CAT, SHW, GS and HD. The S&P ended down by 18 to 6035 as it succumbed to weakness in financials and several large tech stocks such as ORCL, NVDA, VST, APP and MDB.
The Nasdaq also ended lower by 49 down to 19,687 and it was many of the same weak technology stocks that did this one in, while the Russell 2000 Index of small stocks also gave way, this time by 10 points to 2382.
What was discouraging was the fact that all three of these main indices were higher either during the morning and early afternoon but sellers came in and took advantage of this to get out of some issues, not a great sign for the time being.
The VIX surprisingly held up at 14.18 which shows that the 13 and below numbers are holding up well, and one would have thought that it would rise on a day like this one.
Tech titan ORCL was a drag on the market and sank 7% after reporting growth for the latest quarter that fell just short of analysts’ expectations. It was one of the heaviest weights on the S&P, even though CEO Safra Catz said the company saw record demand related to AI technology for its cloud infrastructure business, which trains generative AI models.
AI has been a big source of growth that has helped many companies’ stock prices skyrocket. The stock had already leaped more than 80% for the year coming into Tuesday, which raised the bar of expectations for its profit report and its gain for the year has been the best since 1999.
In the bond market, Treasury yields ticked higher ahead of today’s report on inflation that U.S. consumers are feeling. Economists expect it to show similar increases as the month before.
Today’s update and a report on Thursday about inflation at the wholesale level will be the final big pieces of data the Federal Reserve will get before its meeting next week, where many investors expect the year’s third cut to rates. Expectations for a series of cuts through next year have been a big reason that the S&P has set so many records this year. And the various stock index futures moved higher after the 8:30am release mainly because the market did very badly on the first two days this week, so some kind of upward relief should initially set in.
The yield on the 10-year Treasury rose to 4.22% from 4.20% late Monday.
Even though the Fed has been cutting its main interest rate, mortgage rates have remained high and have been volatile since the autumn. That has hampered the housing industry, and homebuilder TOL stock fell by 7% even though it delivered profit and revenue for the latest quarter that topped analysts’ expectations.
The CEO said the luxury builder has been seeing strong demand since the start of its fiscal year six weeks ago, an encouraging signal as it approaches the beginning of the spring selling season in mid-January.
ALK jumped by 13% after raising its forecast for profit in the current quarter. The airline said demand for flying around the holidays has been stronger than expected. It also approved a plan to buy back up to $1 billion of its stock, along with new service from Seattle to Tokyo and Seoul.
BA, of all things, climbed after saying it is resuming production of its best-selling plane, the 737 Max, for the first time since 33,000 workers began a seven-week strike that ended in early November.
MTN rose after the ski resort operator reported a smaller first-quarter loss than analysts expected in what is traditionally its worst quarter.
Earnings this week will have some important reports and the list is: yesterday – MDB, ORCL, TOL, CASY, MDB, AZO all lower and ALK, MTN higher; today - SFIX, GME higher and PLAY lower; tonight - ADBE; Thursday – COST, AVGO.
Economic reports will see: today – November C.P.I. came in as expected with a gain of 0.3% monthly and 2.7% year over year while ex-food and energy it was also higher by 0.3% and 3.3% year over year; Thursday – November P.P.I.
By Don Selkin