Category: US/Midday Session Brief

Wall Street Set for Gains in Shortened Session

Posted on by Ignacio Teson

All three major Wall Street indexes advanced on Tuesday. The markets are up in a shortened session before Christmas, with the S&P 500 and Nasdaq gaining for the third consecutive day, driven by gains in some large-cap and growth stocks.

The Dow Jones Industrial Average, which tracks 30 large industrial companies, rose 0.42% to 43,085.14 points. The [[SPX]] 500, representing the most valuable companies, gained 0.68%, reaching 6,014.57 points. The Nasdaq Composite, heavily weighted toward technology stocks, increased 1.03%, reaching 19,968.79 points.

Broadcom’s shares stand out, rising 2.82% this morning, along with Nvidia, which gained 1.12%, both benefiting from strong projections for next year due to the surge in artificial intelligence chip demand.

[[SPX-graph]]

Additionally, Netflix shares rose 1.87% after Keybanc analysts raised their price target to $1,000 from the current price of $928, citing lower competition and greater dominance in live-streaming events.

With few major catalysts, low trading volumes expected in the final days of the year suggest a volatile session. U.S. markets close early today, marking the start of the year-end low-volume season.

European Markets

European markets also had an early Christmas close. Major exchanges ended mixed, with the Stoxx 600 index, which tracks the 600 largest companies in the region, rising 0.2%, supported by technology stocks.

Germany’s DAX index fell 0.18% to 19,848.77 points, while France’s CAC 40 rose 0.14% to 7,282.69 points. Spain’s Ibex 35 climbed 0.29% to 11,468.50 points. Outside the eurozone, the UK’s FTSE 100 gained 0.42% to 8,136.99 points.

Even Before Taking Office, Trump Stirs Global Political Turmoil

Posted on by Ignacio Teson

With one month left until Donald Trump begins his second term as U.S. president, his influence is already sending shockwaves worldwide.

His threats to impose tariffs have played a role in Canada’s cabinet crisis, leaving Prime Minister Justin Trudeau in a precarious position. In Europe, the fear of tariffs has further destabilized already fragile governments. Allied leaders are scrambling to maintain support for Ukraine, while Trump pushes for a swift deal to end Russia’s invasion.

This prospect has led both sides to intensify battlefield efforts, with Moscow deploying its most advanced missiles and Kyiv carrying out bold strikes, including the assassination of a Russian general in the capital.

Outside of NATO

In the Middle East, Trump-aligned leaders in Israel and Turkey are maneuvering for strategic advantages, while Iran—frequently targeted by the president-elect—faces setbacks.

Its allies Hezbollah and Hamas are faltering, and the sudden fall of its supported dictator in Syria adds to its troubles.

China, largely spared from Trump’s post-election spotlight on social media, is fortifying its trade defenses in anticipation of aggressive policies from the incoming U.S. administration.

Domestic Front

Domestically, Trump has taken charge of negotiations on a spending bill to avert a government shutdown. Federal Reserve Chair Jerome Powell stated that monetary authorities are beginning to factor in potential measures like tariffs from the president-elect.

Since the election, the U.S. stock market and Bitcoin have surged, gains Trump has proudly claimed credit for. Meanwhile, current U.S. President Joe Biden has all but disappeared from the public stage.

American Airlines Suspends All Flights Due to Technical Issue

Posted on by Ignacio Teson

American Airlines suspended all its flights across the United States on Tuesday due to an unspecified technical issue, according to a company statement and a regulatory notice.

The disruption has affected travel plans for thousands of passengers preparing to fly for Christmas Eve.

This is not the first time widespread flight interruptions have upended travelers’ plans. In 2022, Southwest Airlines faced a system-wide failure that lasted several days.

American Airlines has yet to provide a timeline for resolving the issue. However, the company advised passengers via the social media platform X to send direct messages to address ticket and rebooking concerns.

Reasons and Impact of Suspensions

“A technical issue is impacting American flights this morning. Our teams are working to resolve the problem as quickly as possible, and we apologize to our customers for the inconvenience,” the airline said in a statement.

Numerous passengers reported on social media that their flights were stranded on the tarmac at various airports and were subsequently returned to the gates.

American Airlines operates thousands of daily flights to over 350 destinations across more than 60 countries.

Shares of the airline dropped 3.8% in pre-market trading following the announcement.

The incident comes months after airlines were impacted by a global technological outage linked to Microsoft’s Azure cloud platform and a software issue at cybersecurity firm CrowdStrike.

Wall Street Closes with Gains, Led by Nvidia

Posted on by Ignacio Teson

Wall Street’s main indices closed Monday’s session with gains, buoyed by mega-cap stocks, including several members of the “Magnificent Seven.”

The Dow Jones Industrial Average, consisting of 30 blue-chip companies, rose 0.16% to 42,906.95 points. The [[SPX]] 500, which tracks 500 of the most valuable firms, climbed 0.73% to 5,974.07 points, while the Nasdaq Composite gained 0.98%, closing at 19,764.88 points.

[[SPX-graph]]

Nvidia and Other Mega-Caps Lead the Rally

Nvidia shares surged 3.66%, marking their third consecutive day of gains after a 15% drop from their recent all-time high earlier this month. Other notable performers included Meta (+2.49%), Tesla (+2.30%), and Alphabet (+1.57%).

These high-cap stocks played a pivotal role in lifting the indices, especially as lower year-end trading volumes amplified their impact. The Nasdaq, in particular, benefited from this momentum, notching its third straight session of gains.

Broader Confidence in the Market

Investor sentiment was further bolstered by the passage of a budget law that averted a government shutdown, easing concerns about disruptions to economic activity.

Year-to-date, the indices show significant progress: the Dow has gained 13.84%, the S&P 500 is up 25.25%, and the Nasdaq leads with a 31.67% increase.

Crude Oil Drops Amid Oversupply Concerns

Posted on by Ignacio Teson

Crude oil prices fell on Monday amid thin trading volumes ahead of year-end holidays, driven by investor concerns over a potential oversupply in the coming year and the strength of the US dollar.

Brent crude futures dropped $0.31, or 0.43%, to $72.63 per barrel by session close. Meanwhile, US West Texas Intermediate [[USOIL]] futures slipped $0.22, or 0.32%, to $69.24 per barrel. The Mexican crude blend also declined, shedding 0.28% to $64.51 per barrel.

[[USOIL-graph]]

Outlook and Market Drivers

Analysts forecast an oversupply for next year, which is expected to push Brent prices to an average of $70.50 per barrel, lower than this year’s $79.64 average, according to a December report.

Concerns about European supply eased after reports confirmed the Druzhba pipeline, which transports Russian and Kazakh oil to Hungary, Slovakia, the Czech Republic, and Germany, resumed operations following technical issues at a Russian pumping station last Thursday.

The dollar hovered near its two-year high on Monday, a level it had reached the previous Friday. A stronger dollar increases the cost of oil for holders of other currencies, adding downward pressure on prices.

Weekly Performance

Last week, Brent futures fell by approximately 2.1%, WTI dropped 2.6%, and the Mexican crude blend declined by 2.33%. These losses were driven by global economic growth concerns and weaker oil demand after the Federal Reserve signaled caution regarding further monetary easing.

After a Record-Breaking Year, Wall Street Looks Ahead to 2025

Posted on by Ignacio Teson

This year concludes with exceptional performance on Wall Street, driven by the S&P 500’s remarkable 23% gain, following a 24% rise in 2023—its strongest two-year rally since 1998.

In contrast, the MSCI indices, which track equities across regions and sectors outside the US, posted a modest 9% growth in 2024.

A Bullish Streak with a Historical Pattern

Despite the rally, investors remain cautious as historical patterns weigh heavily. Over the past two decades, Wall Street has typically experienced two to three years of bullish growth followed by a slowdown. If this trend holds, the key question is whether a pullback will occur in 2025 or 2026.

[[SPX-graph]]

The primary concern for investors is whether stocks can sustain their momentum in a market that appears overvalued by many metrics. Notably, 2024 defied even the most optimistic projections, with analysts initially forecasting the [[SPX]] to end between 4,200 (J.P. Morgan) and 5,400 (Yardeni Research), with a median target of 5,000. Instead, the index surged past expectations, closing at 6,000—an 18% overperformance.

Challenges Loom for 2025

Looking ahead, uncertainties surrounding fiscal policies, rising protectionism, and persistent inflation could challenge the market’s resilience. J.P. Morgan’s latest report predicts continued gains in 2025 but notes significant sectoral shifts.

The dominance of the so-called “Magnificent Seven” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla, and Meta Platforms) may wane, giving way to other growth drivers.

Drivers of the Bull Market

The past two years of robust market performance have been fueled by economic resilience, the Federal Reserve’s monetary easing, and the explosive growth of artificial intelligence. US equities have climbed nearly 60% during this period, reflecting a potent combination of innovation and policy support.

As Wall Street transitions into 2025, the optimism of recent years will be tempered by caution, with investors closely watching for signs of whether the next chapter will sustain the rally or bring a long-anticipated slowdown.

European Markets Close with Mixed Signals and Tight Movements

Posted on by Ignacio Teson

European stock markets opened the Christmas week with moderate losses and subdued trading activity, as investors appear to have all but closed the books for the year.

Among the few macroeconomic indicators released today, Spain’s third-quarter GDP growth was confirmed at 0.8%, matching the pace of the second quarter.

Meanwhile, the UK economy showed no growth, with the Office for National Statistics (ONS) revising its initial estimate downward by 0.1 percentage points. In the US, The Conference Board’s Consumer Confidence Index for December dropped to 104.7, below both November’s figure (111.7) and forecasts (112.9).

Ibex Performance

Last week, the Fed’s announcement of fewer-than-expected rate cuts for 2025 triggered market sell-offs on Thursday, though European markets recovered slightly on Friday. The Spanish market stood out by avoiding losses, with the Ibex closing Friday with a modest gain of 0.24%, though it ended the week down 2.4%.

Today, selling pressure returned, albeit at a moderate level, with the Ibex shedding 0.28% to close at 11,435.70 points.

Other European Indices

Elsewhere in Europe, major indices remained near their opening levels in a session lacking significant drivers. The German DAX slipped 0.18%, while the French CAC (-0.03%) and Italian MIB (-0.08%) were nearly flat. The UK’s FTSE 100 bucked the trend, posting a 0.22% gain.

Bond Markets

In the bond market, yields continued to climb. The Spanish 10-year bond yield surpassed 3%, while Germany’s Bund yield hovered around 2.30%. In the US, the 10-year Treasury yield solidified its position above 4.50%.

Panama Responds to Trump’s Threat to Retake Control of the Panama Canal

Posted on by Ignacio Teson

President-elect Donald Trump has criticized the Panama Canal for charging “exorbitant tolls and fees” to U.S. naval and commercial vessels, demanding a reduction in these fees or a return of the canal to U.S. control.

“The tolls charged by Panama are ridiculous, especially given the extraordinary generosity the United States has shown toward Panama,” Trump wrote on his Truth Social platform. “This complete ‘scam’ against our country will stop immediately.”

The United States is the canal’s largest customer, accounting for approximately three-quarters of the annual cargo traffic. However, the canal has been facing operational challenges due to a prolonged drought, which has impacted its capacity to facilitate the passage of ships between the Atlantic and Pacific Oceans.

In the 2024 fiscal year, the Panama Canal Authority contributed $2.47 billion to Panama’s treasury, marking the second consecutive annual decline.

Panama’s Response

Panama’s President, José Raúl Mulino, firmly addressed Trump’s remarks on Sunday, asserting the nation’s unwavering sovereignty over the canal.

“Fellow citizens, as president, I want to state clearly that every square meter of the Panama Canal and its adjacent areas belongs to Panama and will remain so. Our sovereignty and independence are non-negotiable,” Mulino declared in a video released by the government.

He further emphasized that neither China nor any other global power holds direct or indirect control over the canal, which will continue to remain in Panamanian hands.

Gold Futures Decline During the Early Session

Posted on by Ignacio Teson

On the Comex division of the New York Mercantile Exchange, gold futures for February were trading at $2,633.00 per troy ounce, down 0.45% at the time of writing.

Earlier in the session, prices reached an intraday low of $2,627.31 per troy ounce. [[XAU/USD]] is likely to find support at $2,596.70 and face resistance at $2,667.60, according to recent technical trend lines.

[[XAU/USD-graph]]

Meanwhile, the U.S. Dollar Futures Index, which tracks the dollar’s performance against a basket of six major currencies, rose 0.59% to trade at $107.98.

Elsewhere on the Comex, silver futures for March delivery climbed 0.66% to trade at $30.16 per troy ounce, while copper futures for March delivery edged up 0.09% to $4.10 per pound.

Notably, during the previous week, bullion dropped 0.9% following the release of the Federal Reserve’s “dot plot” on Wednesday, which indicated only two rate cuts of 25 basis points each for 2025—signaling less easing than projected in September.

Among other metals, spot silver rose 1.3% to $29.41 per ounce, platinum gained 0.6% to $929.25, and palladium increased 1.2% to $916.

Copper and several other metals, such as zinc, may find support from supply-side factors, as low processing rates challenge the profitability of Chinese smelters in 2025. However, this support is expected to remain limited by modest demand, analysts noted.

On the London Metal Exchange (LME), aluminum rose 1.2% to $2,536.50 per ton, zinc increased 0.2% to $2,972.50, lead gained 0.4% to $1,978, and tin advanced 1.0% to $28,660. Nickel climbed 1.5% to $15,340, after hitting a four-year low of $15,065.

Mexican Peso Strengthens, Ends the Week on a Positive Note

Posted on by Ignacio Teson

The Mexican peso appreciated significantly against the U.S. dollar on Friday, buoyed by favorable inflation data from the United States. These figures suggested that inflationary pressures are gradually aligning with the Federal Reserve’s (Fed) target, boosting optimism in financial markets.

The exchange rate closed at 20.0342 pesos per dollar, compared to 20.2984 pesos the previous day, based on official data from the Bank of Mexico (Banxico). This marked a gain of 26.42 centavos or 1.30%. During the session, the dollar traded within a range of 20.3750 pesos at its highest and 20.0217 pesos at its lowest.

[[USD/MXN-graph]]

The U.S. Dollar Index (DXY), which measures the greenback against a basket of six major currencies, fell by 0.64% to 107.71 points, reflecting broader market dynamics favoring emerging currencies.

Inflation and Interest Rates

The Personal Consumption Expenditures (PCE) price index—the Fed’s preferred inflation gauge—rose by 0.1% in November, below the 0.2% forecasted by analysts. Core PCE, which excludes volatile food and energy prices, also increased by 0.1%, falling short of expectations.

This data boosted market sentiment after the Fed’s midweek announcement, which scaled back expectations for 2025 rate cuts to just two, citing a resilient economy and persistent inflation.
Local Market Dynamics

Meanwhile, local traders continued to digest Banxico’s recent rate cut and the prospects for additional policy adjustments as inflation in Mexico responds to these measures. The peso recovered from earlier losses incurred earlier in the week following the Fed’s announcement.

Compared to last week’s closing rate of 20.1281 pesos, the peso gained 9.39 centavos or 0.47% over the week.

Year-End Market Volatility

Some traders attributed recent currency movements to the typical year-end market volatility, with thinner trading volumes amplifying price fluctuations. Participants are also processing the latest monetary policy decisions from both the Fed and Banxico.

“December’s volatility reflects low liquidity in the market. With fewer participants, even small positions can significantly move prices,” noted a local market analyst.

The peso’s strength underscores both the resilience of Mexico’s economic fundamentals and the impact of shifting global monetary policies.