The S&P 500 Index ($SPX) (SPY) Friday closed unchanged, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.20%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.76%.  Dec E-mini S&P futures (ESZ24) fell -0.20%, and Dec E-mini Nasdaq futures (NQZ24) rose +0.52%

Stock indexes on Friday settled mixed, with the Nasdaq 100 posting a new all-time high and the Dow Jones Industrials posting a 3-week low. The technology sector rallied on Friday, led by strength in chip stocks, as Broadcom surged more than +24% after predicting sales of its AI products will surge +65% in the fiscal first quarter.  Other positive corporate news Friday supported stock gains, with RH up more than +17% after raising its 2025 revenue forecast.

However, the S&P 500 gave up an early advance and turned lower after the 10-year T-note yield rose to a 3-week high.  T-note yields rose on negative carryover from higher European government bond yields.  Stocks were also undercut by inflation news as the US Nov import price index ex-petroleum unexpectedly rose, and the 10-year breakeven inflation expectations rate rose to a 2-1/2 week high.  In addition, Nvidia erased early gains and fell more than -2%, weighing on technology stocks.

The US Nov import price index ex-petroleum unexpectedly rose +0.2% m/m, stronger than expectations of no change.

The markets are discounting the chances at 97% for a -25 bp rate cut at the December 17-18 FOMC meeting.

Overseas stock markets Friday settled mixed.  The Euro Stoxx 50 closed up +0.05%.  China's Shanghai Composite Index closed down -2.01%.  Japan's Nikkei Stock 225 closed down -0.95%.

Interest Rates

March 10-year T-notes (ZNH25) Friday closed down -16 ticks.  The 10-year T-note yield rose +7.1 bp to 4.399%.  Mar T-notes Friday dropped to a 3-week low, and the 10-year T-note yield rose to a 3-week high of 4.405%.  The weakness in European government bond prices on Friday weighed on T-note prices, as 10-year German bunds and 10-year UK gilts fell to 3-week lows.  Also, an increase in inflation expectations was bearish for T-notes as the 10-year breakeven inflation expectations rate rose to a 2-1/2 week high of 2.354%.  In addition, Friday’s +1% rally in WTI crude oil to a 2-1/2 week high was bearish for T-notes. 

European government bond yields Friday moved higher.  The 10-year German bund yield rose to a 3-week high of 2.258% and finished up +5.3 bp to 2.257%.  The 10-year UK gilt yield climbed to a 3-week high of 4.412% and finished up +4.9 bp on that high.

Eurozone Oct industrial production was unchanged m/m, right on expectations, and Sep was revised upward to -1.5% m/m from the previously reported -2.0% m/m.

German trade news was weaker than expected as German Oct exports fell -2.8% m/m, weaker than expectations of -2.6% m/m and the biggest decline in 10 months.

The Bundesbank cut its German 2024 GDP estimate to -0.2% from a prior estimate of +0.3% and cut its 2024 inflation forecast to +2.5% from a prior estimate of +2.8%.

ECB Governing Council member Villeroy de Galhau said, "There will be more rate cuts next year," and I'm "rather comfortable with financial markets' forecasts" on more than 100 basis points of easing.

Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its January 30 policy meeting and a 53% chance for a 50 bp rate cut at the same meeting.

US Stock Movers

Broadcom (AVGO) closed up more than +24% to lead chip makers higher and gainers in the S&P 500 and Nasdaq 100 after reporting Q4 adjusted EPS of $1.42, better than the consensus of $1.39 and forecast sales of its AI products will surge +65% in the fiscal first quarter.  Also, Marvell Technology (MRVL) closed up more than +10%, and Micron Technology (MU) closed up more than +4%.  In addition, ARM Holdings (ARM) closed up more than +2%, and KLA Corp (KLAC) closed up more than +1%.

RH (RH) closed up more than +17% after raising its 2025 revenue forecast to +6.8% to +7.2% from a previous estimate of +5% to +7%. 

Lam Weston Holdings (LW) closed up more than +6% after Reuters reported that Post Holdings is working with bankers to explore a possible deal to acquire the company. 

Tesla (TSLA) closed up more than +4% after Reuters reported that the Trump transition team wants to scrap an order that requires carmakers to report crashes involving self-driving systems.

Progressive (PGR) closed up more than +3% after reporting a combined ratio of 85.6% for November, which Jeffries said was “solid.” 

Elf Beauty (ELF) closed up more than +7% after Goldman Sachs initiated coverage on the stock with a recommendation of buy and a price target of $165. 

Sempra (SRE) closed up more than +1% after Morgan Stanley upgraded the stock to overweight from equal weight with a price target of $98. 

PayPal Holdings (PYPL) closed up more than +1% after Wolfe Research upgraded the stock to outperform from peer perform with a price target of $107.

Nvidia (NVDA) closed down more than -2% to lead losers in the Dow Jones Industrials.

RingCentral (RNG) closed down more than -5% after Mizuho Securities downgraded the stock to neutral from outperform. 

Toll Brothers (TOL) closed down more than -3% after JPMorgan Chase downgraded the stocks to neutral from overweight. 

Electronic Arts (EA) closed down more than -3% after Cowen cut its Q4 mobile revenue estimate for the company to $289 million from a prior estimate of $312 million.

Ryman Hospitality Properties (RHP) closed down more than -2% after JPMorgan Chase downgraded the stock to underweight from neutral with a price target of $100.

ServiceNow (NOW) closed down more than -2% after KeyBanc Capital Markets downgraded the stock to sector weight from overweight.

Adobe (ADBE) closed down more than -1%, adding to Thursday’s -13% plunge after forecasting weaker-than-expected 2025 revenue. 

ZoomInfo Technologies (ZI) closed down more than -1% after KeyBanc Capital Markets downgraded the stock to underweight from sector weight with a price target of $10.

Earnings Reports (12/16/2024)

Compass Minerals International (CMP), Mama's Creations Inc (MAMA), Mitek Systems Inc (MITK), NANO Nuclear Energy Inc (NNE), Quipt Home Medical Corp (QIPT), RCI Hospitality Holdings Inc (RICK), Value Line Inc (VALU).