Wall Street Breakfast: What Moved Markets

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Stocks closed higher Friday following a strong monthly jobs report to clinch a sixth straight week of gains, with the S&P 500 and Nasdaq Composite hitting their highest closing levels since early 2022. Analysts said the Labor Department’s report that November added 199,000 jobs on a seasonally adjusted basis likely keeps the Federal Reserve on pace to hold rates steady at next week’s meeting. More broadly, the drop in the unemployment rate to 3.7% combined with rising payrolls and earnings portrays an economy that is easing toward a soft landing and is not on the brink of a recession. For the week, the Nasdaq climbed 0.7%, the S&P added 0.2% and the Dow Jones average finished flat. The focus now turns to the Federal Reserve’s last monetary policy committee meeting of the year next week. Markets are widely anticipating the central bank to hold steady on rates. Read Seeking Alpha’s Catalyst Watch for a preview of all of next week’s major events.

Spot gold prices climbed to a fresh record of $2,100 on Monday, while bitcoin (BTC-USD) breached $44,000 on Tuesday to reach its highest level since April 2022. “Continued military conflagrations in the Middle East and Eastern Europe, economic recession fears and the increasing likelihood of lower rates have converged to make gold a high-probability candidate for higher prices in the next few months,” said SA analyst Clif Droke. Bitcoin’s rally was also spurred by the imminent approval of applications for ETFs tracking the top crypto’s price, with some betting on the SEC’s nod as soon as next month. Crypto-related stocks also traded higher, including Coinbase (COIN), Marathon Digital (MARA) and Riot Platforms (RIOT). (52 comments)

A new framework unveiled by the Biden administration hoped to crack down on price gouging by Big Pharma via a proposal that would allow federal agencies to seize patents of drugs – developed with taxpayer funds – if they’re too costly. Note that the U.S. previously refused to use its march-in authority to force Pfizer (PFE) and Astellas Pharma (OTCPK:ALPMF) to make their prostate cancer drug cheaper. “We’d be prepared to use existing laws to allow competitors to make and sell these drugs for less,” President Biden declared. Others, like Senator Bill Cassidy (R-LA), countered that “this kind of short-sighted decision would kill American healthcare innovation.” (79 comments)

McDonald’s (MCD) began testing a new small store format called CosMc’s this week, earlier than it previously expected, with plans to open 10 locations by the end of 2024. CosMc’s will feature customizable specialty beverages that will rival popular chains like Starbucks (SBUX). CosMc’s, named after a space alien character featured in ads in the 1980s, is not the first attempt by McDonald’s to cash in on nostalgia following a highly successful Grimace Birthday Meal that went viral in June. The fast-food chain also set ambitious new growth targets, including plans to expand at a record pace to 50,000 restaurants by the end of 2027. (12 comments)

Energy prices continued their descent, with benchmark West Texas Intermediate (CL1:COM) down 22% so far in the fourth quarter and the average price of stateside gasoline falling 16% to $3.21 a gallon. It comes as the U.S. pumps crude at a record rate, surpassing even Russia and Saudi Arabia. OPEC members have been forced to respond to record American production, with the Saudis slashing their output, but the deeper cuts have not resonated with oil bulls and even formed some cracks within OPEC+. Many are also eyeing the U.S. Strategic Petroleum Reserve, as government buybacks have been limited to about 3M barrels per month given physical constraints. (32 comments)

Funding for foreign policy priorities remains stuck on Capitol Hill as dire warnings abound over what it might mean for national security. Tensions continue to brew over aid to Kyiv, and immigration and asylum procedures, as well as what priorities should be tied to what bills to get things over the finish line. “Without congressional action, by the end of the year we will run out of resources to procure more weapons for Ukraine and provide equipment from U.S. military stocks,” White House Budget Director Shalanda Young warned lawmakers. While Lockheed Martin (NYSE:LMT), Raytheon (NYSE:RTX) and Northrop Grumman (NYSE:NOC) all saw outsized gains in 2022 following Russia’s invasion of Ukraine, the three biggest defense giants deflated this year for a number of reasons. (321 comments)