Last Week
There were no lumps of coal in the stockings of investors as Wall Street closed out the penultimate week of the year with a solid advance. The S&P 500 added 1.4%, the Nasdaq Composite gained 1.2%, while the Russell 2000 inched up 0.2%. Advancing issues outnumbered declining issues by a factor of 3 to 2 on light trading volume, with a shortened session on Christmas Eve and a market holiday on Christmas. Gold surged to new highs, while the Dollar slipped to the lower bound of its multi-year range. The yield on the 10-year Treasury and the price of Crude Oil both remained unchanged.
On the economic data front, the Bureau of Economic Analysis reported third-quarter GDP growth at a surprisingly strong 4.3%, well above the consensus figure of 3.2%. Experts noted that consumer and Government spending were the most significant contributors to growth, leading some analysts to question the sustainability of that strength. A reduction in imports also boosted the quarterly figure, as imports are a subtraction from GDP.
While the news on Wall Street was quiet, geopolitics were noisy, with military action in Nigeria and Venezuela, as well as increased intensity in the Russia/Ukraine war. Whereas the equity markets have consistently ignored geopolitics, precious metals, energy, and other commodity markets have been much more responsive. Historically, Gold and the equity markets have been either negatively or uncorrelated, while the Dollar and the equity markets have been positively correlated. We believe the surge in Gold prices, the very low level of consumer sentiment, and the weakness in the Dollar are potential canaries in the coal mine, suggesting investors should consider trimming their allocations to equities (particularly the “hot” sectors) if those percentages have climbed above their target levels.
On the Chicago Sports Scene, the Bears were 4 yards away from another thrilling victory on Sunday night at Levi Stadium versus the 49ers. Alas, Caleb’s scrambling throw into the end zone came up short. The NFC Playoff seedings are still in flux, so Bear Down and beat the Lions next week!
This Week
Trading volume is expected to be low due to the markets being closed on New Year’s Day and a light economic calendar. The Federal Reserve will publish the minutes from its December monetary policy committee meeting on Tuesday, which could provide insight into the monetary policy path for 2026.
We ho-ho-hope for a nice Santa Claus rally to finish a very merry year.
The stocks mentioned above may be holdings in our mutual funds. For more information, please visit www.nsinvest.com.