Summary：Having tumbled 9% month to date, the Nasdaq 100 is on track to deliver its softest December performance since the onset of the dotcom bubble.

MACRO MARKETS

1. US PCE Eases Further in November

The Federal Reserve’s preferred gauge of inflation continued embarking on a downtrend towards the end of the year. Notably, November’s figures released by the Commerce Department showed Personal Consumption Expenditure (PCE) climbing 0.1% MoM (refer to white line). On an annual basis, the index notched its smallest gain since October 2021 to rise 5.5% from a year ago.

Price pressures have undeniably retreated from the steep levels witnessed earlier this year and are raising hopes that the worst is now over. Likewise, in a survey conducted by University of Michigan, results revealed that consumers’ year-ahead inflation expectations retreated to 4.4% - an 18-month low.

Amidst the good news, there remains to be areas of concern. Wage gains, particularly in the service sector remains to be stubbornly high, climbing 0.5% for the second consecutive month. Workers perceive this increase in a positive light, but the same cannot be said for Federal Reserve officials who ideally would like to witness some cooling in the services side of things.

2. Tech Stocks See Worst December in 20 Years

Having tumbled 9% month to date, the Nasdaq 100 is on track to deliver its softest December performance since the onset of the dotcom bubble. More recently, however, December’s loss marks a sharp reversal from November’s 20% rebound.

This week’s downward spiral further stemmed from:

• US jobless claims hovering near historically low levels
• Federal Reserve hiking interest rates for the seventh consecutive time
• Tesla tumbling 30% month-to-date due to concerns arising from its EV demand and CEO Elon Musk’s episode with Twitter

The tech sector has been obliterated this year amid rising inflation, for tech stocks’ valuations are highly susceptible to interest rate movements. While the index has yet to reset new lows it recorded in 2012, bearish interest showed few signs of abating. This is evident through IHS Markit’s records where heightened short interest in Invesco QQQ Trust Series 1 ETF have risen to 6.2% of shares outstanding – a level last witnessed in 2012.

STOCK MOVEMENT

Stocks making the biggest moves:

1. BlackBerry retreated 9.6% having recorded a quarterly loss alongside its underperforming cyber business 
2. Nutanix plunged 8% on speculations that Hewlett Packard Enterprise had ceased takeover talks to acquire the company  
3. Tesla plummeted 8% on Evercore ISI’s downward price target revision citing its inability to hold a key level 
4. Six Flags jumped almost 12% on reports that activist shareholder Land & Buildings Investment bought a 3% stake in the company 
5. Nike soared 12% after quarterly earnings topped expectations while lifting guidance on improved inventory performance

ECONOMIC CALENDAR

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