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Morning Research Notes - 20.12.24
U.S. stocks surged on Friday after a cooler-than-expected inflation report and dovish Federal Reserve comments eased interest rate concerns, leading to a broad-based market rally. Major commodities had a bearish day yesterday: Spot gold closed down 0.3% to $US2,592.45 per ounce, Iron Ore ended the day 0.8% lower to close at $US101.85 per tonne, and Brent Crude fell 0.8% to $US72.79 a barrel.
On Friday, U.S. stocks rallied after the latest inflation report showed a 2.4% rise in the Personal Consumption Index for November, slightly below estimates, as increased consumer spending indicated economic resilience. This data led traders to adjust their expectations for Fed rate cuts in 2025, now anticipating the first in March and another by October. These adjustments, along with dovish comments from Federal Reserve officials, eased concerns about interest rates, sparking a broad-based rally. The Dow Jones rose 498.82 points (1.18%), the S&P 500 gained 63.82 points (1.09%), and the Nasdaq added 199.83 points (1.03%). Despite Friday’s gains, all three major indexes ended the week lower.
Due to technical difficulties this morning, we cannot provide a table or commentary on yesterday’s domestic market close.
Chart of the day
The ongoing rally in the “Magnificent 7” group – led by companies such as Tesla and Nvidia – has positioned the Information Technology sector as the most volatile relative to the broader market, represented by the S&P 500. This heightened volatility mirrors patterns seen during the dotcom bubble of 1998–2001, though it is still too early to confirm similar systemic risks. In contrast, the Financials sector has shown reduced volatility with a beta below 1.0, indicating a divergence in market dynamics where high-growth tech stocks drive market movements, while financial stocks remain stable, focusing on steady performance amid changing conditions.
Source: MacroBond
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