(Justin Vaughn, Editor, Options Trading Report)
The Dow Jones Industrial Average gave up nearly 700 points Friday, while the S&P 500 saw its 2025 gain evaporate, down 1.5%. The Nasdaq was off an alarming 1.6%. The market was closed Thursday in honor of the passing of President Jimmy Carter. The 10-year Treasury yield hit its highest point since 2023 touching a 14 month peak and finishing at 4.784%. Even the 30-year crested 5%, closing at 4.99%. The healthy jobs report and a solid economy could not offset the lethargic market. Traders and investors were impatient, concerned about ‘the cost of money’ and the persistence of inflation. According to The Bureau of Labor Statistics the PPI (Producer Price Index), the upcoming CPI (Consumer Price Index) and The Census Bureau report, detailing the “condition of retail and food services for December” are due to be released Wednesday and Thursday. “The good news is starting to once again sound like bad news. Longer-end rates climbing higher, odds of a 2025 Fed cut are rapidly declining and further dollar strength has potential to be a headwind for U.S. companies,” said Lara Castleton, and strategy at Janus Henderson Investors.
The “Post-Election Rally” has fizzled. The Dow Jones and the S&P 500 have lost all their gains since the election, nearly 7%. The Russell 2000 index, made up of small cap value stocks, has lost 10% in that period. Stocks, across-the-board have lagged as the market is frightful that achieving even a portion of success that flourished in 2024 will be achievable in 2025. “The fourth quarter earnings season is one of the most consequential earnings seasons that we’re going to see in a long time,” said Larry Adams, chief investment officer at Raymond James. Many analysts believe positive earnings not only in the financial and tech sectors but across-the-board in a variety of sectors.
Tuesday’s market was mixed with the Dow Jones up 355 points, while the S&P 500 ended slightly above flatline and the Nasdaq stumbled lower. Trading was slower with tech, chips and AI stocks sliding lower, with little market news to stimulate the indexes. All three reports, (CPI, PPI) gave the market an overdue boost. Wednesday opened with a bang…as the indexes caught fire led by a very active Dow Jones Industrial Average jumping higher all day and finishing up over 700 points, with tech heavy tech Nasdaq Composite soaring 466 points, one of the best days in 3 years, while the S&P 500 added a 100 points. Stocks were higher in the Russell 2000 surging up over 2.5% as buying of value and small cap stocks was the goal of the day as volumes were heavy.
Cocoa out performed nearly all commodities the past year, as retail chocolate prices sky-rocketed 178% to $12,567 a metric ton. Those numbers are only part of the story as cocoa farmers were reassessing future crop designation for several reasons. The leading producers of cocoa beans are: Ivory Coast, no. 1, 174 million tons, Ghana, 48 million tons, the two largest producers, followed by Ecuador, Nigeria, and Cameroon. Ivory Coast and Ghana were hardest hit with very bad weather, extremely dry conditions, and very long wet seasons, and “very deadly crop viruses.” (Swollen Shoot Virus) Four years ago cocoa growers banded together to enact a $400 per metric ton ‘surcharge’ and free fertilizer (from their governments) which the governments never instituted. Crop production in both leading countries has diminished severely, with Ivory Coast off 22% and Ghana down 27%. Over 30% of former cocoa growers are now seeding cassava and maize with palm-oil, a new major product
RUMBLINGS ON THE STREET
Mark H. Haefele, global chief investment officer at UBS and author of: ‘The New Rules of Investing,’ Barron’s – “My concern for those drawn to crypto: Rather than trying to understand the existing system and learning how to invest accordingly, an increasing number of investors are thinking they can escape the prevailing system through cryptocurrencies–and are at heightened risk of losing their life savings in the process.”
John Rogers, chief data and analyst officer at CoreLogic, Barron’s – “A person’s home is the biggest way that Americans make wealth, it’s definitely worth protecting.” He adds, “getting any sort of information about a property’s climate risks is a big step in the right direction.” Referring to climate scores, as they are the ‘new’ important component when scoring a home, in general.
Louise Goudy Willmering, a partner at wealth management firm Crewe Advisors, WSJ – “Those big tech names were priced to perfection, and I would expect that we would see some selloff here as we get some sea legs for 2025.”
Keith Lerner, chief market strategist at Truist Advisory Services, Barron’s – “If the jobs report is evidence of a strong economy then Friday’s (last) stock moves look like an overaction. In general, the market tends to rise when the economy is expanding, because corporate profits should be strong.”