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The S&P 500 clambered to a new 2023 high on Friday — extending November's surprising strength into the first trading day of December.

The big picture: The index's nearly 9% gain last month was the best showing for the stock market since July 2022.

Between the lines: It's actually the bond market that's been the driving force behind the rally in stocks.

After hitting 5% in October the yield on the 10-year Treasury note dove to 4.25%, where it now sits.

Be smart: All else equal, a sharp drop in Treasury yields lifts stock market valuations (and a sharp increase in yields hurts valuations). That seemed to be what happened in November.

Yes, but: There were other reasons for market resilience too, such as strong corporate earnings and robust GDP numbers.

What to watch: Whether FOMO starts to gather momentum in the markets as we approach year-end, with once bearish money managers buying stock to ensure they don't fall short of the benchmark they're measured against.

It could be a recipe for the mother of all year-end rallies.

Rate cut hopes drive S&P to best month of year

And December's already off to a strong start — with a new 2023 high.

Stock market

Chart shows monthly change in the S&P 500 with a 8.9% rise in November.

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

Latest news on Wall Street, Corporate America and financial regulation.

Business

The S&P 500 clambered to a new 2023 high on Friday, as the recent rally — driven by expectations that the Fed could cut rates — keeps rolling. 

Why it matters: The S&P 500 — the most widely used stock index — is now less than 5% from hitting a new all-time high. 

Between the lines: If indeed it does hit a new record, that would confirm that the stocks are in the midst of a full-fledged bull market. 

Be smart: Rate cuts — or even the faintest feeling that could be on the way — tend to act as rocket fuel for the stock market.

Yes, but: There's a chance investors could be getting a bit too exuberant.

According to the market for Fed funds futures, they're now pricing in more than a 50% chance of a rate cut as soon as March.

Bottom line: Officials from the Federal Reserve, including Chair Jerome Powell on Friday, increasingly want that rate cut talk to chill.   

Stocks hit 2023 high

The S&P 500 is now less than 5% from hitting a new all-time high.

It's that time of year on Wall Street when economists and analysts do their best to try to game out what lies in store next year.  

Why it matters: The ritual publications of Wall Street forecasts provide a snapshot of widely held views on what to expect. These predictions don't necessarily turn out to be accurate — so they might better be described as a barometer of the current vibes.

The big picture: Analysts think the economy and inflation will slow in 2024, with the Fed moving to cut rates by the end of the year. 

Yes, but: There's less clarity about what that means for stocks.     

Here's a quick rundown of what economists and analysts are expecting...

Morgan Stanley: "A disinflationary cycle has been under way, mainly driven by core goods deflation and disinflation in housing." 

Goldman Sachs: "At this point the hard part of the inflation fight looks over." 

JPMorgan: "We think that core PCE inflation should moderate from a 3.4% annualized pace in 2023 to 2.5% in [the first half of 2024]."

UBS: "While we expect a slowdown, we do not expect a significant contraction in activity."

Oxford Economics: "We expect a material slowdown in the US economy in the next couple of quarters to give way to a modest acceleration in GDP growth in the second half of 2024. In effect, the Fed will pull off a 'soft-ish' landing."   

TD Securities: "Our 2024 Outlook revolves around our view of slowing US and global growth culminating in a mid-2024 US recession." 

The Fed: Rate hikes are finished. The debate is about whether there will be cuts in 2024.

Morgan Stanley: "The Fed holds policy at a 5.375% peak of this cycle until June 2024, when we expect a cutting cycle to normalize rates to begin."  

Goldman Sachs: "We expect the FOMC to deliver its first rate cut in 2024 Q4 once core PCE inflation falls below 2.5%." 

Moody's: "We envision [the Fed's] first rate cut around the end of Q2 next year and a cumulative decline of at least 100 [basis points] to 4.25%-4.50% by December 2024."  

The stock market: Most prognosticators expect a flat to middling year, though some see more upside (BofA), or potential for a sharp sell-off (SocGen).    

Goldman Sachs: "In a world where the risk-free rate is about 5%, it remains difficult to get excited about risk-adjusted returns in equities."

Société Générale: "2024 should be a decisive year for the S&P 500, which should find its 'true' bottom for this cycle." 

BofA Securities: "We're bullish not because we expect the Fed to cut, but because of what the Fed has accomplished." 

The bottom line: Nobody, not even Wall Street's best analysts and economists, can tell the future. So take all these forecasts with a hefty handful of salt. 

Wall Street analysts predict 2024 vibes, from inflation to stocks

What's in store for the stock market and economy next year.

A crystal ball alternating between downward and upward trends

Corporate America's revenues are roaring back

S&P 500 earnings growth is back on track.

Illustration of hands holding up one hundred dollar bills. Each arm is in a row and getting progressively taller, to indicate growth.

Macro

Axios Macro

Consumers reined in their spending last month as retail sales fell 0.1% in October, the Commerce Department said on Wednesday. 

Why it matters: The data suggests that U.S. consumers pumped the brakes after a strong September that saw retail sales exceed prior estimates.

The big picture: Spending in September was even stronger than originally thought. The data was revised up by 0.2 percentage points to 0.9%.

The October data showed economic activity was cooler, though still strong — the type of development Federal Reserve officials want to see.

The slowdown in retail sales last month is the first decline since March. The data is not adjusted for inflation.

Details: Consumers cut back spending in most categories, including at furniture stores (-2%), motor vehicle and auto shops (-1%), and sporting goods stores (-0.8%).

Spending ticked higher at health and personal care stores (+1%), food and beverage shops (+0.6%) and electronics stores (+0.6%).

Worth noting: Excluding sales of cars, auto parts and gasoline, retail sales rose slightly by 0.1% in October. 

Consumer spending slows in October after booming September

The new data represents the type of development Federal Reserve officials want to see.

Pedestrians carrying shopping bags walk past the Macy's Inc. flagship store on Monday, Nov. 13. Photo: Bing Guan/Bloomberg via Getty Images

Retail

Data: U.S. Department of Labor; Chart: Axios Visuals

The Consumer Price Index was flat in October, helped by a drop in gasoline prices, the Labor Department said Tuesday.

Why it matters: Inflation pressures cooled last month — the freshest sign that easing is happening alongside a still-solid U.S. economy.

The report is especially key as Federal Reserve policymakers decide whether another interest rate increase next month is needed to help bring inflation down to its 2% target.

By the numbers: Core CPI, which excludes energy and food prices, rose 0.2% — slowing from the 0.3% gain in September.

Overall prices rose 3.2% in the 12 months through October, slowing from the 3.7% in September and well below the peak levels reached last year. Core CPI rose 4%, compared to 4.1% the prior month.

Details: Prices for gasoline, used cars and trucks fell outright last month, helping cool over inflation.

Meanwhile, shelter costs rose at a much slower pace last month — a sign that long-awaited disinflation that's been expected by economists is showing up.

The intrigue: The Fed has held off on raising interest rates at two consecutive policy meetings. 

Officials, however, have suggested that its historic rate-hiking campaign might not be over yet. They are looking for signs that inflation is on a consistent downward path.

What they're saying: "We know that ongoing progress toward our 2 percent goal is not assured: Inflation has given us a few head fakes," Fed chair Jerome Powell said last week.

"If it becomes appropriate to tighten policy further, we will not hesitate to do so."

The bottom line: The report suggests America's inflation problem continues to ebb.

Editor's note: This story was updated with a new chart.

Inflation pressures eased in October, Consumer Price Index shows

The data is key as the Federal Reserve weighs whether to raise interest rates next month.

Inflation

Why it matters: The stock prices of the big public dating app companies have plunged this year, as online dating lost its luster with Generation Z.

The dating app market is also saturated, meaning there are just so many of them, and individual apps aren't seeing big user growth they once did, per a Morgan Stanley report earlier this year.

Driving the news: Bumble founder and CEO Whitney Wolfe Herd announced this week she was stepping down.

The company's share price fell 8% after announcing that Slack CEO Lidiane Jones would take over at Bumble.

Details: Bumble's share price fell about 41% in the past year and about 68% from its IPO price in 2021.

Meanwhile, the share price of Match Group — parent company of apps including Tinder and Hinge — fell about 40% in the past year.

In May, Tariq Shaukat stepped down as its president. Tinder's first woman chief executive, Renate Nyborg, exited last year after a short term that saw the company miss Wall Street expectations, the Guardian reported.

Companies have been turning to monetization via paid subscriptions, which can range in price depending on the customer’s commitment. 

"With strong free offerings, online dating has needed to up its game with compelling features to convert more users to payers," per Morgan Stanley.

Between the lines: Revenue is still growing for both of these companies but at a slower pace. 

Bumble saw a bump in paying users across its apps, according to third quarter data from this year, while Match Group saw an overall decrease — except on Hinge.

The companies did not provide data for non-paying users, which represent the bulk of downloads. 

The big picture: College and graduate students have soured on online dating, a new Axios/Generation Lab survey found.

Speed dating in person is even hot again.

Yes, but: Apps still have plenty of believers. 

Online dating grew in popularity during the pandemic, according to dating coach Jess Carbino, who used to work as a sociologist for Tinder and Bumble. 

People broadly recognize "the real need and desire for companionship," she said.

Go deeper: Dating apps lose their luster with college students

Dating apps lose their luster with college students

Dating apps are on the rocks with Wall Street

Illustration of a bull wearing a nose ring with a broken heart. 

Dating apps

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Stocks ripped last week, with the S&P 500 posting its best showing in a year.

Context: The rally reflected a perfect combination of inflation-easing economic data, dovish cooings by the Federal Reserve, and rock-solid earnings results. 

The numbers: The S&P rose 5.9%, the largest weekly leap since November 2022. The same for the Nasdaq composite index which rose, 5.2%. 

Between the lines: The real key to the rally was the sharp decline last week of long-term interest rates — the yield on the 10-year Treasury note — which plunged from almost 5% to 4.5%, a massive move in the typically staid bond markets.  

As we've written ad nauseam — especially last year when a surge in rates clobbered stocks — bond yields have been the single most important key to understanding the stock market in recent years. 

State of play: Stocks, which had been up nearly 20% earlier in the year, and saw those gains shrink to just 7% late last month, are now up 13.5% in 2023.  

What's next: For the good times to keep rolling, the market will be watching the U.S. government's auction of 10-year Treasury notes on Wednesday.  And the October reading on the Consumer Price Index a week from tomorrow will get a lot of eyeballs. 

The bottom line: The dream of the bull market is alive — (in Portland).

Stocks enjoy best week in a year

A perfect combination of data, Fedspeak and earnings are putting wind in Wall Street's sails.

Wall Street

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

It's not often that a new journalistic business model comes along, but Hunterbrook wants to resuscitate one that has, until now, never really taken off: using hedge fund profits to pay for journalism that, in turn, generates trading ideas for the fund.

Why it matters: It's very early days yet — Hunterbrook hasn't even launched — and there's certainly no guarantee of success. But the idea is intriguing.

 The big picture: Hunterbrook's journalists will work for a hedge fund, and therefore will have to work within clear regulatory constraints. 

Specifically, they can't cultivate sources within companies they're writing about in the way that other journalists can. Under the SEC's Reg FD, an employee who gives out material non-public information is committing a crime — but there's a carve-out if that information is given to a public media organization. 

Hunterbook will not be a public media organization for purposes of Reg FD and therefore can't try to obtain information from inside companies. (Or, if it does, it can't trade on that information.)

Hunterbrook can, however, cultivate any number of other sources, including customers, other observers of corporate actions, and even certain ex-employees who left the firm more than six months ago.

What's new: Journalistic skills and experience have long been valued at hedge funds — just ask Carrick Mollenkamp, Laurie Cohen, Shahien Nasiripour, David Poppe, Steve Schurr, and countless others. Generally, however, such folks don't publish their output on the internet, and it certainly doesn't go through journalistic fact-checking and editing beforehand, like it will at Hunterbook.

Hunterbrook is therefore hoping to attract journalists not only with a fat paycheck, but also with the promise that they won't have to give up their bylines. 

In that sense, Hunterbrook is probably closest to Mark Cuban's underwhelming Sharesleuth, although it will be in many countries and asset classes rather than being focused on shorting U.S. stocks. 

Between the lines: Whether or not Hunterbrook's output is journalism is a mostly theological question. Axios' Dan Primack says it isn't; I'm happy to say that it is. 

The firm exists to uncover interesting and important stories and then publish them on the internet for free once they're properly fact-checked. Those stories could even, in theory, be co-published or syndicated to mainstream media sites.

Areas of emphasis will include environmental and humanitarian stories, healthcare, and coverage from countries that otherwise see very little good reporting at all. Naturally, most effort will be put into stories that have the potential to move markets. 

The fund will be able to put on positions prior to a story being published; those positions will be disclosed in the story. If they prove profitable, then Hunterbrook will have found a new way of paying for a variety of journalism that is often very expensive.

My thought bubble: This model has been tried before, without much success. I wrote about it in 2010, and proposed something similar in 2012 before rapidly changing my mind. 

The very idea has the effect of making the high priests of U.S. journalism quite queasy, however. What's really new today is that anything capable of having that effect is almost automatically good for a few million dollars of Silicon Valley venture capital. 

Journalism at hedge funds

This model has been tried before, without much success.

Illustration of Benjamin Franklin wearing a fedora with a "PRESS" card in the hat's band. 

Hedge funds

Do lower-income Americans really need expensive professional advice from financial-services companies or real estate brokers? And would they suffer in its absence? 

Why it matters: Those questions are at the heart of current controversies over retirement advice and broker fees.

 The big picture: The Biden administration's war on junk fees has, predictably, been met with strenuous opposition from well-funded lobbying groups representing the industries assessing those fees. 

A lot of the opposition comes in the form of stultifying legal claims about jurisdictional authority. But a surprisingly common backup line of argument asserts that lower-income Americans and/or people of color will suffer special harm from any crackdown on fees. 

Driving the news (1): The National Association of Realtors has been thrown into turmoil after a federal jury ruled it to be a cartel illegally keeping brokers' fees artificially high. 

The NAR, in response, pointed to a paper arguing that if homebuyers could negotiate fees with their Realtor, the result would be "reduced homeownership opportunities for cash-constrained families." 

In particular, "minorities, lower-income households, and first-time homebuyers who rely more heavily on agent services would suffer the most."

Driving the news (2): The White House announced this week it would crack down on retirement advisers who aren't fiduciaries and can receive commissions that can range as high as 6.5% for some insurance products. 

The Insured Retirement Institute (IRI) responded by saying that "lower- and middle-income workers will lose access to professional financial advice" as a result. 

The logic, per IRI's Jason Berkowitz, is that advisers won't want to take the risks of becoming a fiduciary — primarily that they can be sued for violating the fiduciary standard — unless their client has enough money to make it worth their while. And that won't be true of poorer Americans. 

Between the lines: One of the peculiarities of modern financial capitalism is that intermediaries — bankers, of course, but also Realtors, investment advisers, and technological platforms like Amazon or Uber that sit in between buyers and sellers of goods and services — have become extremely lucrative businesses to be in. 

Far from seeing their fees competed down toward zero, they tend to portray themselves as providing a vital service to a grateful population, and gain pricing power by dint of their perceived necessity. 

Where it stands: While your 401(k) adviser does need to have your financial best interests at heart, your IRA adviser doesn't — opening up savers to the risk of unnecessarily high fees. 

Similarly, the amount a homebuyer pays her Realtor — an amount that's almost always included in the sale price and added to the principal amount of the mortgage — is set not by the buyer, or even the buyer's agent, but rather by the seller's agent — someone who in no sense has the buyer's interests at heart. 

What to watch: In real estate listings, fees are likely to come down, and there's a good chance that buyers will be able to negotiate their own agent's fees.

Mortgage rules might need to be tweaked in order for buyers to continue to have the option to borrow the money for the fee. No one needs another significant cash expense at closing. It's true that if that doesn't happen, that extra cash expense would hit lower-income buyers harder.

That said, many buyers might choose to have no agent at all — or just an AI agent who can walk them through the process.

With retirement accounts, similarly, the big question is whether it would actually be a bad thing were some lower-income Americans not to have a human adviser on their IRAs. 

Given the increased popularity of simple passive investments, it might not be. 

The bottom line: If fees are broadly bad, then they're probably even worse for the poorest households.

The fee hurdle tripping up the retirement and real estate industries

There's a connection between recent battles over retirement advice and broker fees.

Illustration of a hurdle with the top bar shaped like a US dollar sign.

Financial regulation

Closer

Axios Closer

First, it was electronics — then it was cars — and now it's AI: The semiconductor chip is entering a new stratospheric phase.

Why it matters: Pandemic-era supply chain breakdowns and national security concerns cast a spotlight on the need for more chip capacity and, in particular, more domestic production.

Driving the news: After the bell Wednesday, chip giant Nvidia projected revenue of $11 billion for its fiscal second-quarter running through July, astonishing analysts and investors and driving the company's stock up more than 22% today.

Bank of America analyst Vivek Arya called it "remarkable" and said it was $4 billion more than the consensus among analysts.

Wedbush Securities analyst Dan Ives described it as a "jaw dropping" outlook and said it "shows the historical demand for AI happening now in the enterprise and consumer landscape."

And Morgan Stanley analyst Joe Moore noted that Nvidia has historically been conservative about projecting revenue during growth times.

Quick take: If you thought the boom in demand for smartphone, automotive and crypto processing power was big, wait until you see this.

Companies are scrambling to order chips to fuel their generative AI ambitions after Open AI's release of ChatGPT set Wall Street abuzz.

And that means nothing but good things for Nvidia.

What they're saying: Competition is booming, but "we envision Nvidia maintaining its status as the industry standard for the foreseeable future given its competitive moat and the urgency with which customers are developing/deploying increasingly complex AI models," Goldman Sachs analyst Toshiya Hari wrote Thursday in a research note.

The intrigue: The AI chip boom isn't exactly new: Nvidia saw it coming a long time ago. 

“The age of AI is in full throttle," Nvidia CEO Jensen Huang was quoted as saying in 2020.

The big question: Will the chips be made in the U.S.?

Only 12% of semiconductor chips overall were made in the U.S. in 2022, down from 37% in 1990, according to the Semiconductor Industry Association.

In 2022, President Joe Biden signed into law the bipartisan CHIPS and Science Act, incentivizing companies to make chips here — and that's what's happening with investments from companies like Intel, Samsung and Taiwan Semiconductor Manufacturing Company, the latter of which manufactures the advanced AI chips that Nvidia designs and sells.

The White House noted at the time that chips are needed to "keep the United States the leader in the industries of tomorrow, including ... artificial intelligence."

But skeptics say the demand for chips will be so extraordinary that it will difficult for U.S.-based efforts to expand quickly enough.

The bottom line: The AI future depends on the speed with which chips can be developed, advanced and manufactured — and companies that are already doing it have a huge leg up.

AI future depends on semiconductor chips from companies like Nvidia

Illustration of a computer chip on an abstract background of circuitry patterns. 

Artificial intelligence

Trouble in the commercial real estate sector — including office buildings across the country that stand largely unoccupied — is a possible risk to the U.S. financial system, according to the Federal Reserve’s latest Financial Stability report released on Monday.

Why it matters: A huge shift in where white-collar staff decides to work is rippling through the commercial real estate market, with warnings that sharp drops in property valuations will follow as office space demand slumps.

That could spell trouble for the already battered financial sector, with uncertainty about the ultimate effect on the economy

What they're saying: "[T]he magnitude of a correction in property values could be sizable and therefore lead to credit losses" for holders of commercial real estate debt, officials write in the "Financial Stability Report."

Why the Federal Reserve is watching commercial real estate

Worries about the sector prompted Fed officials to more closely monitor the performance of commercial real estate loans.