The Dow, which managed to post a small gain Thursday, is down sharply, off 1485 points through Thursday’s close. If the Dow closes near that level or lower, it would be the largest weekly drop in at least two years. The NASDAQ has lost more than 550 points over the past four days, while the S&P has shed 180 points, or just more than three percent.
In case you might have been suspicious, the entire U.S. stock market is a sham. How else do you end a 10-session Dow losing streak by barely holding on in the final minutes of trading to get +15.37, a gain of 0.036%?
Besides the Dow's miraculous streak-ending, last gasp, everything else was down on Thursday: the Russell 2000, NASDAQ, S&P 500, Dow Transports, Oil, Gold, Silver, Bitcoin, were all down.
For better or worse, this was the first gain in 11 sessions and only the second gain in the last 14. From December 4 through the 19th, the Dow lost 2,671.80 points, dropping from 45,014.04 (an all-time high BTW) to 42,342.24, about six percent.
So, Thursday, it was up 15 points. That doesn't even register as a rounding error, and Friday's shaping up to be a test of will for even the most intrepid traders.
For those interested in charts, patterns, and technical analysis, the major averages have been exhibiting early signs of bear market patterns, up early, but closing lower. Daily charts reveal these obvious markers. Thursday was textbook. The Dow, for instance, opened with a bang, at 42,787.85, up more than 540 points just minutes after the open, but sold off all day, closing very near the lows of the day.
That's not a sign of a healthy market.
On the economic front, the final estimate for third quarter U.S. GDP showed the economy grew at an annualized rate of 3.1%, well above the previous reading of 2.8%, a number that is barely believable. Stripping out government from the GDP calculation renders GDP in the red almost every quarter. GDP is hardly a good measure of a nation's overall economic condition because government produces nothing other than paperwork and debt.
Other data out Thursday morning showed weekly unemployment claims dropped from the 242,000 seen the previous week to 220,000 in the latest reading. The four-week average rose by 1,250 to 225,500.
Being so close to the holidays, weekly claims are likely to be lower than normal as employers are less inclined to hand out pink slips during the festive season. Jobless claims are likely to ramp up in January and February as Trump's DOGE team goes to work and businesses lay off holiday hires.
Adding to the unemployment lines will be layoffs from Big Lots, which plans to close all of its remaining 963 locations after its planned sale to Nexus Capital Management fell through. The cheap junk which lined the shelves of the now-bankrupt company will be even cheaper in days ahead, just in time for Christmas!
In congress, the scaled-down (116 pages, down from 1,547 in the initial, pork-laden proposal) emergency CR put forward by House Speaker Mike Johnson failed by a vote of 174-235-1, with 38 Republicans voting against the measure. Legislators have until midnight Friday to pass some form of funding for the government or shut it down just days before Christmas.
Due to House rules which require three days for members to read bills, any measure put forward on Friday would require a 2/3rds majority under suspended rules. The measure which failed Thursday didn't even come close. Early Friday morning, Speaker Johnson arrived on Capitol Hill, reportedly saying, "so y’all stay tuned, we’ve got a plan."
What that plan is, nobody at present knows, though incoming VP JD Vance - who is still a sitting Senator from Ohio - was reported to be meeting with the Speaker.
Muddying the waters is President-elect Trump's desire for the funding bill to include language extending or suspending the debt ceiling, which has been suspended until January 1, 2025, a kind of poison pill for the incoming administration. Without new legislation, the ceiling will be raised on that date to match whatever borrowing the government has undertaken. The government will use what's known as "extraordinary measures" to keep the government from defaulting, which would likely keep government functioning into the summer of 2025, so there's really no urgency on that front.
As usual, democrats are blaming Republicans and vice-versa. If the usual script plays out, congress will approve some kind of stop-gap measure at the last minute, Biden will sign it, and everybody will leave Washington and head home for the holidays.
Overnight, bitcoin was hammered lower in what may be turning into a leverage/liquidity event. Margin calls certainly were issued during Wednesday's slide and bitcoin seems to have taken over the role gold used to play during such events. Not so long ago, dealers kept excess funds in gold or gold futures and redeemed them when they needed cash. Bitcoin seems to be the choice these days as it appreciates faster than gold (and also loses ground quicker).
Bitcoin, which made an all-time high just above $108,000 on Tuesday, fell to as low as $92,296 just this morning.
Ironically, gold bounced off $2,600 and is up around $10 this morning. Silver remains depressed, trading in the low $29 range on the COMEX.
Futures are pointing to a troublesome open. An hour before the opening bell, equity futures were down sharply, but began rising sharply right at 8:30 am ET, when the BEA released the Fed's preferred inflation gauge, Personal Consumption Expenditures (PCE) price index for November, which came in below Wall Street forecasts, suggesting that inflation continues to slow, albeit at a snail's pace.
That's providing some relief, but all stock futures continue trading fairly deep in the red.
Friday's session looks to be quite the show.
At the Close, Thursday, December 19, 2024:
Dow: 42,342.24, +15.37 (+0.036%)
NASDAQ: 19,372.77, -19.92 (-0.10%)
S&P 500: 5,867.08, -5.08 (-0.087%)
NYSE Composite: 18,958.21, -28.75 (-0.15%)
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