TheMoneyGeek Unplugged

The S&P 500 index closed 0.65% higher in a volatile, shortened holiday trading week. The NASDAQ index gained 0.75%, while the small caps were slightly positive, up 0.21%. The Microcap index outperformed for the week, bouncing up 1.3%. Additional signs of bearish distribution appeared this week.

Another holiday-shortened trading week is ahead, with the stock markets closed on New Year’s Day. Whether Santa can right his sleigh and deliver further gains in his traditional year-end rally remains to be seen.

Durable Goods, a volatile data series, was better than expected. It showed that new orders for key U.S.-manufactured capital goods surged in November, up 0.7%, amid strong demand for machinery. However, new orders were down 1.1% month-over-month, missing expectations.

The Conference Board’s consumer confidence reading was down from last month’s reading and notably lower than forecast. The Present Situation and Expectations Indexes fell, with the Expectations Index just slightly above the Conference Board’s 80.0 “recession threshold.” This was surprising given the renewed post-election euphoria and optimism expected to continue.

While only a single monthly data point, it is surprising that the post-election rebound in Consumer Confidence was not sustained. If consumer attitudes continue to sour and spending slows dramatically, it can significantly impact the stock market and economy in 2025.

New Home Sales from the Census Bureau were up 5.9% in November. Sales rose despite decades-high mortgage rates, mainly due to a drop in the median sales price, which saw its lowest price tag since February 2022. New home inventory was down slightly and represents a supply of 8.9 months at current prices.

Key housing-related stocks have continued to suffer due to rising interest rates. The 30-year mortgage rate from Freddie Mac rose to 6.9% this week, notably higher than its interim low of 6.1% in late September. Continued housing weakness could also indicate impending economic and stock market weakness.

Source: InvesTech Research