OP Wire 12/17 (OP – Lite)

By Steve

Wall Street is trading slightly lower this morning as investors gear up for the final Federal Reserve policy meeting of the year. Tech heavyweight Nvidia enters correction territory, the German DAX faces political instability, and crude oil takes a breather ahead of the Fed’s decision. Here’s what you need to know before the market opens.

1️⃣ Fed to Cut Rates, But Will January Bring Another?

The Federal Reserve kicks off its final policy meeting of 2024 today, with a 25-basis point rate cut widely expected on Wednesday. This will mark the third consecutive cut, and markets have already priced it in.

The focus now shifts to January’s decision and the outlook for 2025:

Goldman Sachs predicts the Fed will pause in January due to stronger-than-expected labor markets and persistent inflation.
Standard Chartered, however, expects another rate cut in January, citing softening labor data.
- A higher unemployment rate or nonfarm payrolls growth of 125k or less could be enough to justify further cuts, they said.

Investors will closely watch the Fed’s updated economic projections on Wednesday for clues about the pace of rate reductions next year.

2️⃣ Futures Slip; Retail Sales on Deck

US stock futures are trading lower this morning:

Dow Futures: -120 points (-0.3%)
S&P 500 Futures: -17 points (-0.3%)
Nasdaq 100 Futures: -57 points (-0.3%)

On Monday, the markets were mixed:

Nasdaq Composite: +1.2%
S&P 500: +0.4%
Dow Jones Industrial Average: -8th consecutive losing session (first since June 2018).

Today’s economic focus is November retail sales, expected to show a monthly increase of 0.6%, signaling continued consumer strength.

3️⃣ Nvidia Falls Into Correction Territory

Nvidia (NVDA), the AI-chip juggernaut, is now officially in correction territory, with shares down 11% from their peak.

Why the slump?

US-China Tensions: Restrictions on Nvidia’s advanced chip sales to Chinese firms have hampered its growth prospects.
Chinese Retaliation: Last week, China launched an anti-monopoly investigation into Nvidia, intensifying the tech rivalry.
Export Adjustments: Nvidia continues designing chips compliant with US export rules to maintain its foothold in China, which remains a critical market.

Despite these challenges, Nvidia remains a pivotal player in the AI space and a key stock to watch.

4️⃣ German DAX Faces Political and Economic Headwinds

Germany’s political landscape was thrown into chaos as Chancellor Olaf Scholz’s government was dissolved Mondayfollowing a vote of no confidence.

Early Elections: Germany will hold early elections on Feb. 23, following the collapse of Scholz’s three-party coalition.
Economic Struggles: Business activity in Germany contracted for the sixth consecutive month, while only 12.6% of companies expect improved business conditions in 2025.

Despite the turmoil, the German DAX has climbed over 20% in 2024, outperforming France’s CAC 40. However, analysts warn of a challenging year ahead, especially with a looming US-EU trade war under a Trump administration.

5️⃣ Crude Oil Awaits Fed Signals

Oil prices are down this morning as traders take profits ahead of the Fed meeting:

WTI Crude: -1.5% to $69.64/barrel
Brent Crude: -0.8% to $73.31/barrel

Key drivers:

Weak Chinese retail sales data raised concerns about global demand.
The Fed’s decision on rates could impact oil prices by influencing economic growth and energy demand.

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Today’s Market Focus

I’ll be keeping an eye on QQQ, WMT, and AAPL for potential weaknesses as we head into another eventful trading day.

See you all in chat, and let’s Stack Your Gains this week!

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