U.S. Stocks Set Records While Commodities Strengthen on Rising Geopolitical Risks

Index Update:  U.S. stocks ended Wednesday’s shortened session at record levels, with the Dow hitting a new high and the S&P 500 posting a second straight record close. Gains came even as stronger-than-expected Q3 GDP growth of 4.3% reduced expectations for near-term Fed rate cuts and pushed Treasury yields slightly higher. Nike surged after a filing showed Apple CEO Tim Cook bought shares, while Intel and Nvidia slipped on reports of halted chip-testing plans. Trading volumes remained light ahead of the holidays, with a full session scheduled for Friday.

Market Movers:  On Wednesday, the top gainers were SOBR Safe, Inc. (+82.31%), followed Omeros Corporation. (+75.54%). On the contrary, Vuzix Corporation (-14.71%), and Boxlight Corporation. (-12.50%) declined the most the same day.

Commodities Update:  WTI and Brent crude oil prices both moved higher on Friday and were set for weekly gains of over 3%, driven mainly by heightened geopolitical tensions. Markets reacted to the U.S. tightening its naval blockade of Venezuela, continued attacks on energy infrastructure amid the Russia-Ukraine conflict, and a U.S. airstrike in Nigeria. However, worries about excess global supply limited the rally. WTI traded near $58.6 per barrel and Brent around $62.4 per barrel, marking their strongest weekly performance since October.  Gold surged to a fresh record above $4,530/oz and silver climbed past $75/oz as investors sought safe-haven assets amid escalating geopolitical tensions and expectations of U.S. rate cuts. Ongoing U.S. action against Venezuelan oil shipments, the Russia-Ukraine conflict, and a U.S. strike in Nigeria supported demand for precious metals. Markets continue to price in multiple Fed cuts as inflation cools, further boosting non-yielding assets. Central bank buying and ETF inflows have also reinforced the rally, with gold up over 70% year-to-date and silver soaring about 158%.

Macro Updates:  The U.S. dollar stayed near 97.9 on Friday, its lowest level since early October, as expectations for further Fed rate cuts weighed on the currency. Despite strong GDP data, markets still anticipate easing, even as Fed officials remain split. Rising geopolitical tensions have boosted safe-haven demand for precious metals, adding pressure to the dollar. The currency is down 9.7% year-to-date, putting it on track for its weakest year since 2017, amid concerns over U.S. trade policy and central-bank independence.

Bonds Commentary:  The 10-year U.S. Treasury yield rose to about 4.15% on Friday as investors reassessed the Fed’s policy path. Markets are still pricing in two rate cuts next year, even after Q3 GDP grew 4.3%, the fastest pace in two years and well above forecasts. The strong data undermines concerns about slowing economic momentum and supports a more hawkish stance among some Fed officials, who currently project only one rate cut in 2026.

Futures Update:  U.S. stock futures held largely steady on Friday morning following the Christmas break, with trading activity muted and volumes likely to stay light ahead of the shortened New Year week. S&P 500 futures were flat at 6,981.25, Nasdaq 100 futures were little changed at 25,883.25, and Dow Jones futures slipped 0.1% to 48,979.

Stocks exhibited a lack of clear direction early in the session but gradually moved higher throughout Wednesday's trading day. The major averages extended their winning streak to five consecutive days, with both the Dow and S&P 500 reaching new record highs. The S&P 500 gained 22.26 points, or 0.32%, closing at 6,932.04. From a technical perspective, the index found support at important levels and steadily advanced, indicating the potential for a sustained upward trend in the near term. The 14-day Relative Strength Index (RSI) has crossed above the midpoint, further supporting a positive outlook. Key support levels are around 6,844, while resistance is anticipated near 6,988.