Stocks Rally During the Week Due to Economic Confidence

The S&P 500 Index ($SPX) (SPY) on Friday fell -0.03%, the Dow Jones Industrials Index ($DOWI) (DIA) fell -0.04%, and the Nasdaq 100 Index ($IUXX) (QQQ) fell -0.05%.  March E-mini S&P futures (ESH26) fell -0.08%, and March E-mini Nasdaq futures (NQH26) closed -0.07%.

The S&P 500 index on Friday edged to a new record high but then fell back and closed the day slightly lower.  Stocks ran out of gas on Friday ahead of the weekend, but the S&P 500 index still closed the week up +1.4%, and the Nasdaq 100 index closed the week up +1.2%. 

The 10-year T-note yield fell -0.6 bp on Friday, giving the stock market some underlying support.  Also, the odds for a FOMC rate cut at its meeting crept back up to 20% from Tuesday's low of 13%.

Stocks saw support during the week from confidence in the US economic outlook after Tuesday's news that US Q3 real GDP rose by +4.3% (q/q annualized), well above market expectations of +3.3%. 

Gold, silver, and platinum on Friday reached new all-time highs on early dollar weakness and geopolitical concerns, with the US striking targets in Nigeria and with ongoing Venezuelan tensions.

The US on Thursday launched strikes on ISIS targets in Nigeria in a security and intelligence collaboration with the Nigerian government to combat rising terrorist attacks in the country.  Nigeria is an OPEC member.  Mr. Trump previously warned that the US would strike ISIS in Nigeria if the group did not stop killing Christians.

The US Coast Guard forced the sanctioned oil tanker Bella 1 to turn away from Venezuela and head out into the Atlantic Ocean, according to a Bloomberg report.  US forces have been shadowing the vessel for several days as part of President Trump's blockade on sanctioned oil tankers connected with Venezuela.  US forces wanted to board Bella 1 near Barbados on Sunday, but the vessel instead moved back out into the Atlantic Ocean.

There may be some progress on a Ukraine-Russia peace deal as Ukrainian President Zelensky said he expects to meet with President Trump on Sunday in Florida.  Mr. Zelensky said a 20-point peace plan is 90% ready, but it depends on the meeting with Mr. Trump and can't be finalized without input from Russia and Europe. Russia reportedly said that the 20-point peace plan fails to answer many questions.

Seasonal factors are bullish for stocks.  According to data from Citadel Securities, since 1928, the S&P 500 has risen 75% of the time in the last two weeks of December, climbing 1.3% on average.

The markets are discounting the odds at 20% for a -25 bp rate cut at the FOMC's next meeting on January 27-28.

Overseas stock markets closed higher.  The Euro Stoxx 50 was closed on Friday as part of the Christmas holidays.  China's Shanghai Composite closed up +0.10% for the eighth consecutive daily gain.  Japan's Nikkei Stock 225 closed up +0.68%.

Interest Rates

March 10-year T-notes (ZNH6) rose +2.5 ticks.  The 10-year T-note yield fell -0.6 bp to 4.128%.  T-note prices saw support from Friday's -2.5% decline in crude oil prices and the -1.2 bp decline in the 10-year breakeven inflation expectations rate to 2.225%.

European government bond markets were closed on Friday as part of the Christmas holidays.

Swaps are discounting a 4% chance of a +25 bp rate hike by the ECB at its next policy meeting on February 5.

US Stock Movers

The Magnificent Seven stocks on Friday closed mixed.  Nvidia (NVDA) rose +1.0%, but Tesla (TSLA) fell -2.10%, and four other Magnificent Seven stocks also closed lower. 

Nvidia (NVDA) rose +1.0% after news of a licensing deal with AI startup Groq as a means to put Groq's AI inference and low-latency chip technology into Nvidia's product lineup.

Chip stocks closed mixed, with leadership on the upside from Nvidia.  Also, Asml Holding (ASML) and Broadcom (AVGO) closed up +0.6%.  However, Arm Holdings (ARM) and NXP Semiconductors (NXPI)closed down more than -1%.

Cryptocurrency-exposed stocks closed mostly lower, with Bitcoin (^BTCUSD) falling about -0.4%. 

Galaxy Digital Holdings (GLXY) fell more than -4%.  Mara Holdings (MARA) and Riot Platforms (RIOT) fell more than -3%.  Coinbase Global (COIN) fell -1.2%.

Energy companies showed weakness across the board due to Friday's -2.4% plunge in crude oil prices.  Devon Energy (DVN) and Marathon Petroleum (MPC) fell more than -1%.

Mining companies saw strength, with gold, silver, and platinum posting record highs, and copper trading higher.  Coeur Mining (CDE) and Freeport McMoRan (FCX) closed up more than 2%.  Hecla Mining (HL) and Newmont Mining (NEM) rallied by +1% or more. 

Target (TGT) closed up by more than +3% after the Financial Times reported that activist investor Toms Capital Investment Management has built up a stake in the retailer.

Earnings Reports(12/29/2025)

None.