Futures for U.S. stocks dipped on Tuesday as market players tuned into the final Federal Reserve meeting for 2024.
The S&P 500 has witnessed 11 consecutive days of more decliners than advancers, matching the longest streak since 1990.
While many view this as a bearish sign, could that perception be misleading?
Analyzing the longest historical streaks suggests a more optimistic outlook, with significant outperformance seen on average after one year.
🤔 pic.twitter.com/mgDJ0wVlYY
— Ryan Detrick, CMT (@RyanDetrick) December 17, 2024
The Dow Jones Industrial Average is poised for its ninth consecutive day of declines, marking its longest losing streak since 2018. Dow-related futures fell by 218 points, or 0.4%.
Meanwhile, S&P 500 futures dipped by 0.3%, and Nasdaq-100 futures decreased by 0.2%. The December meeting of the Fed commences today and wraps up tomorrow, with expectations leaning towards a quarter-point decrease in interest rates.
Having fallen for seven straight days, the Dow is still only 2.6% off its all-time highs (the third smallest drop ever).
Since 1900, I’ve observed 78 7-day streaks, with an average drop of 24.7% from ATHs.
— Ryan Detrick, CMT (@RyanDetrick) December 15, 2024
Market observers will be attentive to comments from Chair Jerome Powell for hints regarding the potential future course of interest rates.
The 6-month forecast for capital expenditures remains above recent lows, although a slight easing was noted in December compared to November, according to the Empire Manufacturing Index pic.twitter.com/2t8MY1oO9t
— Liz Ann Sonders (@LizAnnSonders) December 17, 2024
Mark Hackett, head of investment research at Nationwide, indicated that a quarter-point reduction is “the overwhelmingly likely outcome” of Wednesday’s policy meeting. However, he also pointed out that “the prevailing consensus suggests the Fed will adopt a more gradual approach thereafter, anticipating just two further cuts through 2025.” Hackett remarked that Powell is currently “navigating a tightrope” by lowering borrowing costs while the U.S. economy seems robust and inflation persists above the Fed’s 2% target.
Oil prices dipped following the release of underwhelming economic data from China on Monday, raising fresh concerns about global crude demand.
Broadcom meets earnings expectations
Brent crude fell by 0.3% to $73.66 a barrel, while West Texas Intermediate dropped 0.5% to $70.34 a barrel.
Bond yields saw a slight uptick over the last day. The yield on the benchmark 10-year U.S. Treasury note stood at 4.442%, whereas 2-year notes yielded 4.276%. In other market activities, XRP’s value increased post Ripple’s introduction of a new stablecoin token.
Gold prices softened ahead of the Federal Reserve meeting. Investors are also focusing on the Bank of England’s meeting scheduled for Thursday. The U.K.’s FTSE 100 index fell by 0.8% after wage growth exceeded forecasts, tempering expectations for future rate cuts by the Bank of England.
Adam Crisafulli of Vital Knowledge mentioned that enthusiasm regarding Donald Trump’s re-election prospects is fading. Investors are increasingly concerned about issues such as rising deficits and tariffs, which counterbalance advantages like deregulation and tax breaks. Moreover, potential shifts in Federal Reserve policy are fostering a more cautious sentiment in the market.
The Fed is anticipated to significantly slow the rate of cuts in 2025.
