Weekly Market Recap:

This week, U.S. equities saw notable declines across major indices. The Dow (-2.25%), S&P 500 (-1.99%), Nasdaq (-1.78%), and Russell 2000 (-4.45%) all ended lower, weighed down by a significant Wednesday selloff. Key outperformers included airlines, off-price retail, cruise lines, and apparel retailers, while laggards were energy, homebuilders, industrial metals, and chemicals. Treasuries weakened as the yield curve steepened. The dollar index gained +0.7%, marking its 11th rise in 12 weeks. Gold dropped -1.1%, WTI crude slid -2.6%, and Bitcoin was flat.

Corporate Highlights:

• Lennar (LEN -10.6%): Missed on most metrics and announced a spin-off of Millrose subsidiary.

• Micron (MU -12.1%): Provided weak February guidance citing inventory concerns and NAND oversupply.

• Vertex (VRTX -14.3%): Disappointed with trial results for its non-opioid pain treatment.

• Darden Restaurants (DRI +12.5%): Strong results at Olive Garden and Longhorn drove FY25 guidance increases.

• Teva (TEVA +33.9%): Announced positive clinical data for an ulcerative colitis and Crohn’s disease treatment.

• Qubitekk (QUBT +162.8%): Surged on growing quantum computing enthusiasm.

Sector Performance:

Tech (+0.73%) and Utilities (+1.62%) outperformed, while Energy (-5.58%), Real Estate (-4.97%), and Materials (-4.16%) led declines. A hawkish Fed meeting, government shutdown concerns, and stretched valuations weighed on sentiment. Looking ahead, focus shifts to limited economic data releases and a shortened trading week due to the Christmas holiday.

As the Federal Reserve reduces interest rates, many anticipate relief in mortgage costs, yet the reality may not meet expectations. While the Fed’s adjustments typically influence borrowing conditions, mortgage rates are tied to a complex web of factors, including long-term bond yields and market sentiment. Recent rate cuts reflect the central bank's efforts to bolster economic resilience, yet mortgage rates have edged higher. This counterintuitive trend stems from persistent inflation concerns and expectations of tighter monetary policy well into 2025. Investors foresee a measured pace of rate normalization rather than a rapid descent, limiting the scope for mortgage rate reductions. Moreover, housing demand remains robust, adding upward pressure to rates. Structural issues, such as limited housing supply and elevated construction costs, compound the challenges, making affordability a key concern for prospective homeowners. For policymakers, the task lies in balancing inflation control with fostering economic growth, recognizing that lower rates alone cannot address broader housing market dynamics. For borrowers, the message is clear: navigating today’s market requires strategic planning and flexibility, as relief in mortgage rates may be slower to materialize than hoped. The interplay of these forces underscores the need for cautious optimism as we look toward 2025. While rate cuts signal opportunity, they are no panacea for broader economic complexities.

Next Week:

Notable Earnings:

• Monday (12/23)

  • Anavex Life Sciences Corp. ($AVXL)

  • Limoneira Co. ($LMNR)

• Tuesday (12/24)

  • Vertical Aerospace LTD ($EVTL)

• Wednesday (12/25)

  • CLOSED

• Thursday (12/26)

  • Ermenegildo Zegna N.V. ($ZGN)

  • Ennis Inc ($EBF)

• Friday (12/27)

  • Bright Minds Biosciences Inc ($DRUG)

  • Nukkleus Inc ($NUKK)

Notable Ex-Dividend Dates:

• Monday (12/23)

  • Broadcom ($AVGO) 1.31%*

  • Western Union ($WU) 8.74%

• Tuesday (12/24)

  • Portland General Electric ($POR) 4.13%

• Wednesday (12/25)

  • CLOSED

• Thursday (12/26)

  • Altria Group ($MO) 7.50%*

  • Philip Morris International ($PM) 4.26%

  • Southwest Airlines ($LUV) 2.26%

• Friday (12/27)

  • General Electric ($GE) 0.67%

  • Ralph Lauren ($RL) 1.45%

  • Royal Caribbean Cruises ($RCL) 0.90%

*Dividend Aristocrat

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