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The Yield Dilemma: Is It Still Wise to Invest in U.S. Government Bonds?
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Wall Street Today | US Stocks Rise, Treasury Yields Slump as Fed Signals Dovish Skew

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Moomoo Recap US joined discussion · Dec 14, 2023 15:41
Wall Street Today | US Stocks Rise, Treasury Yields Slump as Fed Signals Dovish Skew
RECAP
U.S. stocks pushed to back-to-back records Thursday, with the Dow Jones Industrial Average up less than 60 points after carving out a fresh record. Optimism about the Federal Reserve's interest-rate-cut projections delivered a day ago had been fueling a powerful rally. Treasury yields fell, and interest rate-dependent stocks in the housing or auto sector flew.
The $Dow Jones Industrial Average(.DJI.US)$ advanced 158 points, or 0.43%, to 37,248, after touching a record intraday high of 37,287.50. The $S&P 500 Index(.SPX.US)$ edged up 12 points, to 4,719. The $Nasdaq Composite Index(.IXIC.US)$  rose 27 points to 14,761.
MACRO
FOMC Review: How Low Can Treasury Yields Go
Wednesday's FOMC meeting and Powell's dovish speech sent stock and bond markets into a frenzy. The decline in risk-free rates confirms the Goldilocks period, allowing many industries suppressed by high-interest rates to recover and may change the pricing logic of many assets.
The benchmark 10-year yield slipped five basis points Thursday to as low as 3.97%, down from a peak of 5.02% in late October.
Jeffrey Gundlach at DoubleLine Capital says US 10-year yields will fall toward the low 3% range. Former Pimco bond king Bill Gross dismissed such a prediction, saying the yield is already about where it should be at just 4%.
The latest batch of U.S. economic data released Thursday was also benign, showing initial jobless claims fell by 19,000 to 202,000 in the week ending Dec. 9, the lowest level since mid-October. Data also showed sales at U.S. retailers rose a solid 0.3% in November in a good start to the holiday shopping season, suggesting the economy might not be cooling off all that much.
Mortgage Rates Fall Below 7% for the First Time Since August
Mortgage rates fell below 7% for the first time since August, as the U.S. economy is showing signs of cooling off following the U.S. Federal Reserve signaling a turn to rate cuts.
The 30-year fixed-rate mortgage fell for the seventh week in a row, and averaged 6.95% as of Dec. 14, according to data released by $FREDDIE MAC(FMCC.US)$ on Thursday.
That was down eight basis points from the previous week - one basis point is equal to one-hundredth of a percentage point.  "We likely will see a gradual thawing of the housing market in the new year,' Freddie Mac says. A year ago, the 30-year fixed-rate mortgage was averaging 6.31%.
SECTORS
Solar Companies Soak in Positive Rays From the Fed
Stocks were up big following Wednesday's FOMC rate meeting, where the committee announced it would not raise rates and showed off a dot plot of three likely rate drops in 2024. Industries like retail, housing, and automotive rose in the hope that it would become easier to finance consumer purchasing. Solar stocks enjoyed time in the sun, for a little-known reason.
Shorlty after 11 am EST on Thursday, $Sunrun(RUN.US)$  was up 19%, $Sunnova Energy International(NOVA.US)$  was up 16%, and $SunPower(SPWR.US)$ jumped 17%, Suppliers to the solar market were also up, with ENPH  +11% and SolarEdge Technologies SEDG +13%.
As Travis Hoium of the Motley Fool wrote, solar panel companies run on 20-30-year loans for consumer installations on detached single-family housing units. When interest rates rise, it eats directly into solar panel profit. When they fall, revenue and margins get better on solar loans.
Redfin, Opendoor Stocks Jump on Hopes for Lower Interest Rates
$Redfin(RDFN.US)$ reported in a press release that daily average mortgage rates have fallen to 6.82%, and housing payments have dropped to their lowest level since April. It is the first time daily rates have dipped below 7% since July.
Rates dropped after the Fed indicated on Wednesday that they're on a path toward lowering interest rates more and sooner than expected. Redfin and real estate firms like it predict that Fed movements are a reason mortgage rates are likely to drop into the mid-6% range in 2024.
$Opendoor Technologies(OPEN.US)$, in the same basket as an online house-flippers stock climbed 8% premarket and 12% by 11 am EST after a 19% jump Wednesday.
COMPANIES
Apple Stock Hits Record High as Wall Street Raises Price Target
$Apple(AAPL.US)$ shares closed at a record high of $198.11 Thursday after brushing within $0.30 of $200 a share. The stock has risen 52% for the year, with a market capitalization of around $3.08 trillion, solidifying its position as the world's most valuable company.
Costco Wholesale Q1 Sales $56.72B Miss $57.72B Estimate
$Costco(COST.US)$ reported quarterly sales of $56.72 billion, which missed the analyst consensus estimate of $57.72 billion by 1.73 percent.  This is a 4.19 percent increase over sales of $54.44 billion last year.
Foot Locker's Turnaround Story Stands Out, Analyst Suggests Stronger Than Retail Peers
Shares of $Foot Locker(FL.US)$ continued to climb after spiking last month on strong quarterly earnings.
Goldman Sachs Stock Records 2023 High
$Goldman Sachs(GS.US)$ rose Thursday, lifted by the post-Fed optimism that has boosted financials and other stocks.
Moderna Reports More Promising Data on Its Cancer Treatment. Shares Surge 11%
$Moderna(MRNA.US)$ on Thursday unveiled new data from a continuing early-stage trial of the personalized cancer treatment it is testing with Merck, saying that the updated results help build the case that the drug works.
Berkshire Hathaway Raises Stake in Occidental Petroleum by 10.5 Million Common Shares
$Berkshire Hathaway-B(BRK.B.US)$ increased its stake in $Occidental Petroleum(OXY.US)$by purchasing about 10.5 million common shares this week, according to a US Securities and Exchange Commission filing late Wednesday.
Source: Bloomberg, Dow Jones, CNBC, Reuters
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more
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