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By Megan Leonhardt | Thursday, December 19 Circle Back Season. With the Federal Reserve making its last interest-rate decision of the year and providing a ton of fodder for the outlook heading into 2025, it feels like we're officially in the season where friends and colleagues start sending the "let's circle back after the holidays" type of notes. Everyone, that is, except for the markets. After throwing a hissy fit yesterday on the news that the Fed's roadmap for 2025 includes only two rate cuts, the Dow Jones Industrial Average bounced back very slightly today. It closed up 16 points, or 0.04%, to break its streak of ten-straight declines. The other two major indexes were less successful at rebounding today. The S&P 500 and the Nasdaq Composite slid during the final half hour of trading, both closing down 0.1%. "Yesterday's sell-off created a wave of technical damage, including a short-term uptrend violation and the S&P 500’s first close below the 50-day moving average in over three months," writes Adam Turnquist, chief technical strategist for LPL Financial. While Turnquist says investors shouldn't panic—the longer-term uptrend remains intact—he still recommends investors wait for momentum to improve before stepping up to buy this dip. That's due, in part to the fact that the near-term risk remains to the upside for longer-term Treasury yields. The 10-year U.S. Treasury note yield closed up again today, at 4.575%. Higher bond yields tend to weigh on stock valuations. Beyond the more hawkish outlook from the Fed, uncertainty in Washington D.C. isn't helping to build investors' optimism. After Donald Trump and Elon Musk threw the bipartisan funding deal into disarray this week, there was understandable concern that we could have a government shutdown ahead of Christmas. Bah humbug, indeed! Yet it appears that perhaps an early Christmas miracle may still emerge, with House Republicans reportedly reaching an agreement late this afternoon to keep the government funded through March. No details yet on what changes are in store, but the clock is ticking. Lawmakers have less than 36 hours to get a deal across the finish line before the shutdown deadline hits. 
DJIA: +0.04% to 42,342.24 The Hot Stock: Darden Restaurants +14.7% Best Sector: Real Estate -1.7% 
Closing Out StrongThe Federal Reserve may have had the loudest say on the economy as the year comes to a close, but the Bureau of Economic Analysis will have the final one. The BEA put out its final estimate of third quarter inflation-adjusted U.S. gross domestic product growth this morning and revised it up by 0.3 percentage point—to a 3.1% annualized rate. That was above expectations and was largely driven by upward revisions to consumption and net exports, as well as sturdier business and government spending. That means that four of the last five quarters have recorded real GDP gains of 3% or better, which Santander's Stephen Stanley calls an "incredible run." Adding to the stronger economic vibes today was the fact that initial jobless claims retreated by a notable 22,000 to 220,000 for the week ending December 14. Nationwide Financial Markets Economist Oren Klachkin writes that the slowdown in claims was likely due to effects from the Thanksgiving holiday. "The trend in continuing claims shows it’s becoming incrementally harder for workers to find new opportunities. Job growth may not be as robust as a few months ago, but conditions are far from cold," Klachkin said. Amid the rosy economic data, however, is an expected stronger print that's not exactly good news. Tomorrow morning, the BEA will release the personal consumption expenditures price index for November—the Fed's preferred inflation gauge. Economists surveyed by FactSet expect headline PCE inflation of 0.2% last month, translating to a 2.5% year over year increase. That's a notable uptick from the 2.3% 12-month rise logged through October. The core PCE price index, which excludes food and energy costs, is expected to measure a gain of 0.2% from October to November, a slight deceleration from October's 0.3% pace. But compared to a year ago, the core PCE price index is expected to up 2.9%, higher than the 2.8% year-over-year measure in October. In their December Summary of Economic Projections, Fed officials estimated that headline PCE inflation would end the year at 2.4% and core PCE inflation would be 2.8% year over year. Yet there is some optimism that the recent stalled progress on slowing inflation will be only a short-term blip, rather than a new battle for the Fed. "Despite recent inflation bumpiness, economic fundamentals remain disinflationary," EY Senior Economist Lydia Boussour wrote this morning. 
The CalendarCarnival announces fourth-quarter fiscal-2024 results tomorrow. The Bureau of Economic Analysis releases the personal consumption expenditures price index for November. Economists forecast a 2.5% year-over-year rise, two-tenths of a percentage point more than in October. The core PCE price index, which excludes volatile food and energy prices, is seen rising 2.9%, compared with 2.8% previously. 
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