Breakfast News: Rate Expectations
December 16, 2024
| S&P 500 6,051 (-0.0%) |
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| Nasdaq 19,927 (+0.12%) |
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| Dow 43,828 (-0.2%) |
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| Bitcoin $101,450 (+1.63%) |
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Source: Image created by JesterAI.
1. All Change at the Fed in 2025?
The Federal Reserve’s two-day December meeting concludes Wednesday with the final interest rate decision of 2024, as most observers expect another 25-point cut. But what comes next is looking increasingly uncertain, as inflation has not yet come down to the Fed’s 2% target. Doubt is creeping into previous expectations for four more cuts in 2025.
- “On the cusp of a transition to them not cutting every meeting”: Former senior Fed official David Wilcox is among those expecting two or three cuts in 2025. Luke Tilley at Wilmington Trust is sticking with four, saying “The story overall is they still expect inflation to come down.”
- “We can afford to be a little more cautious”: Fed chair Jerome Powell has already pointed to greater flexibility thanks to the U.S. economy remaining stronger than previously believed.
2. Nike Hopes to Return to Winning Ways
Nike (NKE -1.11%) reports Q2 results on Thursday. The sportswear giant previously beat Q1 earnings estimates, but didn’t quite hit revenue targets.
- A transitional year ahead: Investors should expect a year of change as Nike comes under new management, and should watch for improvements in digital sales, which fell last quarter.
- “A reliable dividend grower for more than a decade”: As the company prepares for its next stage of growth under returning leader Elliott Hill, lead advisor Matt Argersinger has Nike on Dividend Investor’s watchlist. The service’s goal is outsized dividend growth.
3. The Start of Bear Season?
The S&P 500 has been smashing through new all-time highs in December, and it’s only a few points short of yet another one. And all of Wall Street is bullish about 2025, expecting stocks to keep pushing higher? Oh, maybe not…
- “The environment does not appear conducive to continued equity mania”: Stifel’s Barry Bannister is a dissenting voice among those tracked by Yahoo, predicting an S&P 500 fall in 2025. He expects sticky inflation to pause interest rate cuts and hold back stocks.
- Why it wouldn’t matter: Billionaire investor Kenneth Fisher famously said "time in the market beats timing the market" – and Foolish investors know a bear market can present buying opportunities.
4. Next Up: Epic Earnings
Thursday brings a Q1 update from Hidden Gems rec Accenture (ACN 0.38%). The professional services specialist beat Q4 forecasts last time, as it grows its AI-driven business. Shareholders will want to see more than 5% of Accenture's bookings to come from AI in order to declare victory in the consultant's efforts to penetrate that market fully.
- Up 10,897% since IPO in 1996: Rule Breakers recommendation FactSet (FDS -0.48%) also posts on Thursday, and investors will hope the data and analytics company’s record of beating estimates for the past four quarters will continue.
- Repack and refocus: FedEx (FDX -0.04%), recommended by Stock Advisor, will post Q2 earnings the same day, after a disappointing Q1 saw revenue flat and earnings down. Keep an eye on its cost-saving plans and profitability.
5. iPhones Just Too Thick
The Wall Street Journal, citing “people familiar with the matter,” reports Apple (AAPL 0.20%) is set to make some key design changes to its iPhone range next year. The article states we should expect slimmer models, and cheaper ones with simpler camera technology, as Apple aims to revive growth after years of incremental upgrades.
- Folded to go: Apparently, Apple is working on two folding devices: one larger that doubles as a laptop, and a foldable iPhone, with a 2026 release targeted for the latter.
- Future vision: The WSJ also says the company has plans for a successor to its Vision Pro virtual-reality headset, but hasn’t decided on any details yet.
6. Foolish Fun
What will be Apple's next big revenue-generator: Vision Pro, smart glasses, foldable iPhone, or something else? Become a member to hear what your fellow Fools are saying!
