Economy

The Dow Jones Industrial Average fell 0.95%, the S&P 500 was down 1.33% and the Nasdaq Composite briefly was down 1.72%. COMMENTS:SAM STOVALL, MARKET STRATEGIST, CFRA, ALLENTOWN, PA:“Investors had been saying, oh, I’ll take profits in the new year, and then I can wait to pay taxes on them until 2026; now some of them are wondering how much of those profits will still be around, so they’re just grabbing them now. And there are just more profits to take when it comes to the Nasdaq, which is up more than 30%. There’s a lot of uncertainty about how we’ll do in the first weeks or so of the new year. If the market is indeed worried about inflation, then as we head into 2025, those are likely to be some readings that aren’t so good. But the expectations for earnings growth are still strong, thanks to increased productivity and higher profit margins. The flip side? Valuations are at a 40% premium to the 20-year average for S&P 500 stocks.”JEFF SCHULZE, HEAD OF ECONOMIC & MARKET STRATEGY, CLEARBRIDGE INVESTMENTS, NEW YORK CITY:“The Santa Claus rally came a bit earlier this year, and I think this is profit taking ahead of another holiday-shortened week next week. That’s another reason I think this isn’t causing more apprehension heading into a weekend: it’s not uncommon for the market to hit air pockets when the volumes are light, and it’s been a slow week. Any volatility we witness should be a good buying opportunity.”“There is selling in Magnificent 7 stocks because they’ve accounted for 100% of all the profits in the S&P 500 so far this month and have outperformed the equal-weighted index, which is down. But the megacap leadership this time felt more like it was the result of a short squeeze; that investors who had been relatively underweight bringing their holdings back to benchmark levels. I think those exaggerated moves higher mean we could see the Mag 7 continue to lag over the next week or two.” ADAM TURNQUIST, CHIEF TECHNICAL STRATEGIST FOR LPL FINANCIAL:“Big tech is taking a much-deserved holiday break after doing most of the heavy lifting for the broader market since Election Day (the Magnificent Seven has contributed to around 85% of the S&P 500’s +4% gain since November 5). However, selling pressure today has expanded beyond just the mega caps as over 90% of S&P 500 constituents are trading in the red. And while it is hard to put a lot of weight in a thinly-traded holiday-shortened week, the latest relief rally has lost momentum and bulls are faced with another test at the 50-day moving average into the weekend. A failure to hold this level (5,940) would point to a likely retest of the November price gap near 5,860. Damaged market breadth and the lack of momentum indicators with bullish signals point to elevated near-term downside risk. The macro backdrop also has become more challenging for a sustained recovery, especially with 10-year Treasury yields and the dollar breaking out above key resistance levels last week.”ALEX MORRIS, PRESIDENT & CIO, F/m INVESTMENTS, WASHINGTON, D.C.“Over the past decade, and more so since the COVID melt-up, equity markets have increasingly become liquidity dependent. Slow days, like now, lack the enthusiastic investor plowing in or moving around large cash piles, and tend to lag. It seems there are no low-volume ‘green’ days any more. Add in tax-loss harvesting, which is still an option beyond the ten largest stocks in broad market indexes, and today’s ‘red’ looks less scary. The lesson is: this market thrives on liquidity – and it may just be dependent on it.”STEVE SOSNICK, CHIEF MARKET STRATEGIST, INTERACTIVE BROKERS, GREENWICH, CONNECTICUT”I’ve heard anecdotes that pension funds are rebalancing ahead of year-end, selling stocks and buying bonds. Unfortunately, I can’t verify that, but it would explain the sudden sell-off on no news. And of course, if large funds are selling stocks en masse, the megacap tech stocks would bear the brunt because of their heavy weighting in major indices.” “If nothing else, today is a reminder that just because a ‘Santa Claus’ rally is a statistical likelihood, it is far from guaranteed.”“We’ve seen an attempt at a buy-the-dips rally smacked back, which seems to confirm that this is some selling or rebalancing underway by a big investor.”JAY WOODS, CHIEF GLOBAL STRATEGIST, FREEDOM CAPITAL MARKETS, NEW YORK”What people are doing is they’re raising some cash. They’re taking some profits right now as we go into the end of the year and getting ready for an opportunity if it presents itself in the beginning of next year. Tech, which has had a tremendous run, is starting to pull back. I think this is the beginning of a healthy correction that will get focused over the next four to eight weeks as we switch administrations.”ROBERT PAVLIK, SENIOR PORTFOLIO MANAGER, DAKOTA WEALTH, FAIRFIELD, CONNECTICUT“Any kind of selling pressure sort of spirals a little bit out of control when you have a thinly traded market. And I think the selling pressure is really just people looking for direction.”“It’s not a lot of institutions. I think a lot of non-professionals are looking seeing the market’s direction and they just go with the flow. There’s concerns that maybe the first part of this year can involve some repositioning and reallocation of funds and those that are trading today and next week are probably just trying to get a little bit ahead of that.”“There’s uncertainty about the direction of interest rates and inflation, and the fact of all this is sort of coming together at one time. What is the Federal Reserve going to do in the first part of next year?”“And then there’s a new administration coming in with new policies and (there are uncertainties as to) what those policies will actually be, which policies will actually be implemented. There’s a lot of talk about new and many changes, but what’s really going to happen?”“And because of the big run that you’ve had in 2024, portfolios are not exactly positioned correctly for 2025 and I think a lot of people are expecting a lot of changes in the early part of the year.”“You’re seeing some of that today and that will lead to more selling pressure because people just want to capture the gains before they go on into 2025.”PETER TUZ, PRESIDENT, CHASE INVESTMENT COUNSEL, CHARLOTTESVILLE, VIRGINIA“This is end of year stuff going on people have had a pretty good year, and it’s typical year-end selling pressure caused by people taking profits, not a lot of buyers out there and not a lot of volume.““(There’s) no reason to jump in and buy these things at these valuations, and tax planning is on peoples’ minds this week and will be on Monday and Tuesday. I don’t attribute it to, you know, any changing outlook in anything right now.”“The Santa Claus rally is one of those historic statistics that bears watching, but because of the change in administration and the potential change in policy you’re probably seeing more action now than you would ordinarily. There’s the potential for a lot of disruption in 2025.”BRYCE DOTY, SENIOR PORTFOLIO MANAGER, SIT FIXED INCOME ADVISORS, MINNEAPOLIS”Today the market has really been reacting to the implications of taxes coming up. Tax positioning is overwhelming the other factors. But the more the Fed looks out of touch (with economic realities), the worse it is for equities…Tax trading will continue for the rest of the year.” More

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Carvallo stated in an interview that he is not dismissing the possibility of either increasing or decreasing rates if necessary to achieve the new 3.5% inflation target. The Central Bank projects a 3.7% price increase next year, slightly above this year’s rate.Carvallo believes that the current monetary policy rate is at a level that will guide inflation towards the Central Bank’s new target. He has maintained borrowing costs constant since April, with inflation recording 20 consecutive months around the previous 4% target.Despite no immediate policy changes, analysts surveyed by the central bank this month predict that board members will reduce rates by half a percentage point next year to 5.5%. The Paraguayan government has committed to reducing its fiscal deficit from an estimated 2.6% of GDP this year to 1.5% in 2026. The central bank predicts a slight decrease in growth to 3.8% next year, down from an estimated 4% in 2024. Carvallo stated that this forecast takes into account the negative impact on trade with Brazil due to the depreciation of the real and the anticipated recovery of Argentina’s economy in 2025.This article was generated with the support of AI and reviewed by an editor. For more information see our T&C. More

(Reuters) -The U.S. Food and Drug Administration said on Friday that it has approved an injectable version of Bristol Myers (NYSE:BMY) Squibb’s blockbuster cancer drug, Opdivo.Opdivo is part of a class of drugs called PD-1 inhibitors, which enhance the immune system’s ability to fight cancer by removing its natural brakes.Like other PD-1 drugs such as Merck (NS:PROR)’s Keytruda, it was previously available through infusions and patients received it via an intravenous drip in a health office. The new injectable form is expected to be more convenient for patients and could help shield the company from erosion of sales when the patent for the intravenous version expires later this decade.The injection, branded as Opdivo Qvantig, has been approved to treat all previously approved adult, solid tumor indications, either on its own, as maintenance therapy or in combination with chemotherapy.The drug will be available in early January, and will be priced at parity with the list price of the IV version, Adam Lenkowsky, Bristol’s chief commercialization officer, told Reuters ahead of the approval.The IV version of the drug has a list price of $7,635 per infusion for two weeks for the lower dose and $15,269 per infusion for four weeks for the higher 480-milligram dose.The approval was based on data from a late-stage study, which showed that the subcutaneous form of the drug was not inferior to the intravenous formulation in patients with advanced kidney cancer who have received prior systemic therapy.The drugmaker is relying on newer treatments like Opdivo Qvantig to drive growth as patents on older drugs, such as cancer drug Revlimid and blood thinner Eliquis, expire later this decade.Opdivo Qvantig was co-formulated with Halozyme Therapeutics (NASDAQ:HALO)’ drug delivery technology, which helps reduce treatment administration from hours-long IV infusions to subcutaneous injections delivered in minutes. More

NEW DELHI (Reuters) – Indian household spending on non-food items such as transport, garments and entertainment rose in both rural and urban areas in 2023/24 while outlays on staples like wheat and rice dropped, a government report showed on Friday.The Household Consumption Expenditure Survey for 2023/24, conducted from August 2023 to July 2024, showed non-food items accounted for about 53% of per capita spending in rural areas, up from about 47% in 2011/12, and 60% in urban areas, up from about 57%.The shift in spending patterns is expected to lead to a decrease in the weighting of food items in the consumer price index (CPI), which is used by the central bank to frame monetary policy.Officials from the Ministry of Statistics and Programme Implementation have previously indicated plans to revise the base year for the retail inflation data from 2012 to 2024, incorporating these findings.Analysts said food is likely to have a smaller weighting in India’s consumer price index in the near future.The urban-rural monthly per capita consumer spending gap narrowed to 70% in 2023/24 from 84% in 2011/12, the report noted.In nominal terms, rural consumer spending climbed 9.55% year on year to 4,122 rupees ($48.23) per month in the year through July from 3,773 rupees the previous year, while urban spending rose 8.31% to 6,996 rupees from 6,459 rupees, the report showed.Adjusted for inflation, rural spending grew just 3.5%, while urban spending remained subdued due to retail inflation of about 5.5% in the fiscal year that ended in March.Compared with 2011/12, rural consumer spending rose 45.4%, outpacing the 38.1% increase in urban areas, reflecting a slight convergence in consumption patterns.Consumer spending, which accounts for about 58% of India’s economic activity, remains a critical driver of economic growth in Asia’s third-largest economy.($1 = 85.4710 Indian rupees) More

MOSCOW (Reuters) – The Russian rouble is expected to keep changing hands for around 100 per U.S. dollar at the start of 2025 and gradually weaken to 108 towards the end of the year, a Reuters poll of 10 economists showed on Friday.The rouble fell to its lowest level in about 2-1/2 years in November as the U.S. imposed new financial sanctions on Russia, but it has regained some ground since then after the central bank intervened to support it.Most analysts believe that the 100 mark against the dollar is the new equilibrium level as the situation with foreign trade transactions, disrupted by sanctions, stabilises, while other factors will support the rouble.Analysts noted that the first quarter of the year is traditionally favourable for the rouble as imports, overseas travel and external debt payments decrease.The rouble slumped to 103.7 against the U.S. dollar on Friday after the central bank announced it would withdraw some support for the currency in the first working week of 2025 following the New Year break.Analysts predicted that the central bank would hold its benchmark interest rate at 21% throughout the first half of 2025 after it surprised markets on Dec. 20 by keeping rates unchanged.”We expect the central bank to keep the key rate at 21% at the meeting on Feb. 14. We believe that lending will continue to slow down, aligning with the regulator’s forecast for 2025,” said Mikhail Vasilyev from Sovcombank.Russia’s central bank has hiked its key rate to the highest level in more than 20 years as it seeks to curb inflation, which analysts expect to be at 9.8% this year, and to counter economic overheating as a consequence of excessive government spending.Analysts are estimating GDP growth of 3.9% in 2024, slightly above their previous call of 3.8%. In 2025, economic growth is forecast to slow sharply to 1.6% due to the central bank’s monetary tightening.Analysts foresee inflation rates falling to 6.6%, closer to the regulator’s target of 4%, towards the end of next year, creating room for the central bank to reduce its benchmark rate to 18% in the fourth quarter of 2025. More

The bank said in a note Friday that the move is expected to be followed by two additional cuts of the same magnitude in June and September.”We expect the Fed to deliver its next 25bp cut in March followed by two more 25bp cuts in June and September to a terminal rate range of 3.5-3.75%,” the bank wrote.Goldman also anticipates that the Fed will slow its balance sheet runoff in January 2025 and halt it entirely by the second quarter.Goldman Sachs projects above-consensus U.S. real GDP growth of 2.4% year-over-year in 2025, citing robust real income growth and easing financial conditions as key drivers.Core personal consumption expenditures (PCE) inflation is expected to decelerate to 2.4% by the end of 2025, aided by cooling shelter inflation and easing wage pressures. However, tariffs are forecasted to provide a moderate inflationary boost.Meanwhile, the bank says the unemployment rate in the U.S. is projected to decline gradually, reaching 4.0% by the end of 2025, reflecting continued strength in the labor market despite the economic shifts.Goldman notes that global growth is expected to reach 2.7% year-over-year in 2025, driven by easing financial conditions and rising disposable incomes.However, the firm highlights risks from geopolitical developments, particularly U.S. policy shifts, including higher tariffs on China and autos, lower immigration, and new tax cuts under the incoming Trump administration.In the Eurozone, Goldman expects the European Central Bank (ECB) to continue rate reductions until mid-2025, while China’s GDP growth is forecast to slow to 4.5% amid domestic challenges. More

The median estimate of 10 economists saw annual inflation falling to 45.2% in December from 47.09% in November, standing closer to the upper end of central bank’s year-end prediction range. Forecasts ranged from 44.9% to 45.54%. Monthly inflation is expected to slow from previous readings due to easing food price rises and a limited rise in energy, economists said. Forecasts ranged between 1.4% and 1.84%.Economists will also look at the course of services inflation, which showed signs of slowing in recent months, following the announcement of 30% increase in minimum wage for 2025, a level far less than requested by workers.In November, inflation was higher than expected at 47.09% annually and 2.24% on a monthly basis on the back of food, housing and health-related prices.The central bank, having kept its key interest rate steady at 50% since March, cut it by 250 basis points to 47.5% on Thursday. The central bank said it will set policy “prudently on a meeting-by-meeting basis with a focus on the inflation outlook,” and respond to any expected “significant and persistent deterioration”.The Reuters poll showed annual inflation falling to 26.5% by year-end, based on the median estimate. Forecasts ranged between 25% and 29%. The central bank sees inflation falling to 21% in the same period, and is expected to cut rates further next year.The Turkish Statistical Institute will release December inflation data at 0700 GMT on Jan 3. More