• An end of the week recovery. While stocks took a volatile turn last week with the Dow experiencing 10 days of losses, a partial recovery rally on Friday offset much of the earlier drop. Every index closed in the green above 1% on Friday. The Dow's 10 day losing streak was the longest since an 11-day decline in 1974. The streak ended on Thursday when the index rose slightly.
• The Feds are now hawkish. The U.S. Federal Reserve on Wednesday afternoon indicated that it’s likely to cut interest rates less than previously expected in 2025.  The Federal Reserve Board has however marked the new year with a quarter-point interest rate reduction, aiming to stimulate the economy and bolster employment. 
• Bond prices tumbled. For the second week in a row, bond prices tumbled, pushing yields higher. The yield of the 10-year U.S. Treasury note climbed to its highest level in nearly seven months, reaching as high as 4.59% on Thursday before retracing to around 4.53% at Friday’s close.
• The markets are unsettled. An index that tracks investors’ expectations of short-term U.S. stock market volatility moved higher about 74% on Wednesday. The Cboe Volatility Index closed Wednesday’s session at 27.7, up from 15.9 the previous day. By Friday’s close, it had settled down to 18.4.
• Cooler inflation data. November’s reading of the personal consumption expenditures price index — the Federal Reserve’s preferred inflation metric — increased 2.4% year over year. 
• GDP is growing. The U.S. economy’s third-quarter growth was stronger than anticipated. It was revealed on Thursday that the GDP grew at an annual rate of 3.1%. That was up from an earlier estimate of 2.8% and the second quarter’s 3.0% growth. GDP growth has now topped 2.0% in eight of the last nine quarters.
• The dollar moved higher. The value of the U.S. dollar moved higher after the U.S. Federal Reserve on Wednesday embraced a more hawkish outlook for further rate cuts. Relative to other major currencies, the dollar rose more than 1%. This was its highest level since November 2022.  
• The government crisis was averted. President Joe Biden signed a government funding bill on Saturday that averted a government shutdown.
• Mortgage rates went higher. Despite the Fed cut, the average 30-year mortgage rate was 6.72% in the week through Wednesday, compared with 6.6% a week earlier, according to Freddie Mac data. The average 15-year mortgage rate was 5.92%, from 5.84%.

• Nvidia (NVDA)
• Rigetti Computing (RGTI)
• Tesla (TSLA)
• Nukkleus (NUKK)
• Teva Pharmaceuticals (TEVA)

Biggest Gainers

• Rigetti Computing (RGTI) +25.44%
• Palantir Technologies (PLTR) +8.54%
• Nvidia (NVDA) +3.08%
• IonQ, Inc. (IONQ) +17.64%
• Kingsoft Cloud Holdings (KC) +14.05%

Biggest Losers

• Innovative Industrial Properties (IIPR) -22.74%
• XPO (XPO) -7.05%
• NextNav (NEXT) -6.92%
• Uranium Energy Corp. (UEC) -5.09%
• Novo Nordisk A/S (NVO) -17.83%

Weekly Notables

 Big Banks Including Bank of America and Chase are Hit with Lawsuit Over Zelle Payment Fraud

The Consumer Financial Protection Bureau on Friday sued the operator of the Zelle payments network and the three U.S. banks that dominant transactions on it. According to the agency's allegations, the firms failed to properly investigate fraud complaints or give victims reimbursements. Zelle said in a statement Friday that it was prepared to defend itself against this “meritless lawsuit.”

Stellantis Takes Back Ohio Layoffs After CEO's Sudden Departure

Franco-Italian automaker Stellantis has changed its course on laying off about 1,100 employees at an Ohio Jeep plant less than three weeks after the abrupt resignation of Chief Executive Carlos Tavares. The company has decided not to put any employees on indefinite layoff from Jan. 5 due to a previously announced shift reduction and will instead extend a worker adjustment and retraining notification notice, a company spokesperson said.

The Week Ahead

• Potential market moving catalysts this week: The last days of the year will be light in terms of economic reports, but a consumer confidence report will be issued on Monday, followed by Tuesday releases on new home sales and durable goods. 
• 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
   

Company Spotlight: Nukkleus (NUKK)

NUKK shares have been on a tear this week and have continued seeing momentum following the company’s announcement that it took a 51% controlling stake in defense acquisition firm Star 26 Capital. Nukkleus has acquired a 51% controlling stake in Star 26 Capital Inc. for $26 million, marking a strategic shift from fintech to defense. Star 26 owns 95% of RIMON, a key supplier of components for Israel's Iron Dome missile defense system. The transaction, completed on December 15, 2024, includes cash, promissory notes, common stock, and stock warrants, with an option to acquire the remaining equity later.