• U.S equity markets dragged. A weak performance in mega tech stocks pushed the market lower on Friday. While no major corporate or economic news may have impacted investor caution, the last weeks of December may be left for profit taking. All three major indexes closed in the red however 2024 was a strong year for the S&P 500. The index is higher by over 28% including dividends through Friday's close. This year's return follows a 26.3% gain in 2023. The last time the S&P 500 delivered 20%+ gains in back-to-back years was in 1999.
• U.S. small-cap stocks were under pressure. The Russell 2000 declining by over 1.5%.
• Asian markets were mixed. Japan's Nikkei saw a 1.8% gain while markets in China were flat. 
• Longer-term bond yields moved north. The 10-year Treasury yield closed above the 4.6% mark while the 2-year yield was little changed at 4.33%. Ever since the Fed revealed a 0.5% interest-rate cut on September 18, the 10-year yield has risen by nearly 1%.
• Not much movement in job claims. Initial jobless claims for last week were 219,000, below expectations for 223,000 and little changed from the prior reading of 220,000.
• Inflation worries aren't fading. "We expect a gradual deceleration from where we are, but to levels that are still uncomfortably high for the Fed," Deutsche Bank chief economist Matthew Luzzetti told Yahoo Finance in an interview last week. So far this year, inflation has moderated but remains stubbornly above the Federal Reserve's 2% target on an annual basis.
• Gold and silver had a good year. A year ago, gold was trading at about $2,022 an ounce. Recently the price had climbed 27% to $2,631.90. Silver sold for $24.09 an ounce at the end of 2023 and is currently priced at $29.968. That's up 24% on the year.
• Analysts predict big shift in AI. “Now the time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding,” Wedbush analysts led by Daniel Ives wrote in a Dec. 26 report, “enterprise consumption phase is ahead of us beginning in 2025.” Palantir and Salesforce could benefit from this according to Ives.
• The auto industry will embrace changes. S&P Global Mobility projects US sales will hit a seasonally adjusted annual rate (SAAR) of 16.2 million units in 2025, an estimated increase of 1.2% from a projected 16.0 million units in 2024, which S&P says still reflects an uncertain environment for auto sales in the US. "Vehicle pricing levels are expected to decline but remain high; interest rates are expected to shift further downwards, but inflation levels are anticipated to remain sticky, and new vehicle inventory should also progress, but careful management is expected too,” said Chris Hopson, manager of North American light vehicle sales forecasting for S&P Global Mobility, in its 2025 report.
• Housing market should slowly pick up next year. 2024 was one of the slowest sales years for housing in three decades. “We think it’s going to continue to be a slow climb out,” said Danielle Hale, chief economist at Realtor.com, which expects existing home sales to rise 1.5% next year to 4.07 million. That figure would be significantly below the average of 5.28 million homes sold annually between 2013 and 2019.

• Nvidia (NVDA)
• Rigetti Computing (RGTI)
• Lucid Group (LCID)
• D-Wave Quantum (QBTS)
• Ford Motor Company (F)

Biggest Gainers

• Rigetti Computing (RGTI) +10.62%
• Amedisys (AMED) +4.67%
• GDS holdings Limited (GDS) +7.94%
• Lenovo Group (LNVGY) +8.43%
• Kingsoft Cloud Holdings (KC) +23.24%

Biggest Losers

• Lemonade (LMND) -10.78%
• ZEEKR Intelligence (ZK) -9.60%
• TeraWulf (WULF) - 9.05%
• Peloton Interactive (PTON) -8.57%
• Beam Therapeutics (BEAM) -7.35%

Weekly Notables

Trump is Trying to Save TikTok

President-elect Donald Trump has asked the Supreme Court to pause implementation of a law that would ban TikTok in the U.S. on Jan. 19 if the app is not sold by its Chinese parent company. The court is due to hear arguments in the case on Jan. 10. “President Trump takes no position on the underlying merits of this dispute,” wrote D. John Sauer, Trump’s lawyer who is also the president-elect’s pick for U.S. solicitor general. “Instead, he respectfully requests that the Court consider staying the Act’s deadline for divestment of January 19, 2025, while it considers the merits of this case, thus permitting President Trump’s incoming Administration the opportunity to pursue a political resolution of the questions at issue in the case.”

Big Lots Reaches Deal to Save Many Stores

Discount chain retailer Big Lots, which filed for bankruptcy protection in September, has reached a deal that will keep hundreds of its stores and distribution centers open. The company announced on Friday it will be sold to Gordon Brothers Retail Partners, a firm that specializes in distressed companies. Gordon Brothers will then transfer Big Lots’ stores, distribution centers and other assets to other retailers.

The Week Ahead

• Potential market moving catalysts this week: This week investors can look forward to pending home sales on Monday, initial jobless claims and construction spending on Thursday, and ISM manufacturing data on Friday.
• Earnings on deck this week: BHP Group Limited, Ennis, Mega Matrix, Zeo Energy, ILearningEngines, EMCORE Corp., Spire Global, Nukkleus Inc. Best Inc., Sound Group Inc., Universal Corp., AMMO Inc., Comtech Telecommunications Corp., Cel-Sci Corp., and Outlook Therapeutics.