Outlook

As the year comes to a close, with just about two weeks left, there is going to be plenty of news flow with consequences for global markets.

Worries are mounting that the significant investments committed to the modern technology’s infrastructure and the associated profitability may pale in comparison to the remarkable valuation expansion that has occurred among AI related companies.

The US utilities sector is entering a transformative phase, fueled by structural demand shifts from electrification and the rapid adoption of AI.

Regardless of the broader debate, one thing does seem clear: if the Fed were truly on the verge of launching a new QE program — someone forgot to tell the three-month Treasury bill.

While the world is focused on the possibility of bringing the Russia-Ukraine war to an end, there are developments in other parts of the world that are also worth a mention.

Overall bullish holiday sentiment, positive news on a handful of AI-related megacap tech names, and continued investor optimism for the Fed to adjust rates at its next meeting powered the advances.

With the delay of government statistics clouding the outlook for growth and consumer spending, Black Friday numbers will be a topic of conservation as we begin a new month.

The Fed is inching toward neutral territory but keeping its options open—because when you’re driving in the fog, you don’t hit the gas. A December cut “not a foregone conclusion,” was a statement that sent markets scrambling to recalibrate expectations.

The middle of this week saw a volatile trading session, with the S&P 500 finishing up about 40 basis points. And then there was Nvidia doing its usual song and dance with the beat-and-raise routine it trots out every quarter.

Stocks ended mixed after a nail-biting week for investors, who grew anxious over megacap tech valuations and interest rates as the government shutdown came to an end. It takes time to get a tanker ship up and running again after a full stop.

Volatile trading on Wall Street has risk assets and fixed income swinging from gains to losses indecisively as investors await clarity on AI and the status of employment prior to making bold wagers.

Many small-cap industries and sectors outpaced their large-cap counterparts over this 6-month period, a sign of the broadening equity rally and the role of other secular investment themes in play.