Stocks Look Set for a Santa Rally. Why 2024 Could Be Less Cheerful.

In short, the Goldilocks scenario for the economy is still possible. Growth looks like it’s holding up even after the most aggressive cycle of Federal Reserve interest-rate increases in a generation. And inflation is coming down. New data on the personal consumption expenditures index, a key inflation indicator, on Thursday will add to the picture.

Speeches by Fed officials Austan Goolsbee, Michelle Bowman, and Loretta Mester on Tuesday and Wednesday will also be helpful for understanding how the central bank is viewing the economy. Chairman Jerome Powell speaks on Friday. At this point, it looks like stocks could enjoy a Santa rally in a year when things have already been good.

The tricky part is what comes next.
Deutsche Bank
just put out its 2024 World Outlook and sees tough times ahead. Its forecasters note the lagged effects of rate hikes have yet to come through. Advanced economies in Europe and the U.S. are headed for tepid growth at best, and the risk of U.S. recession hasn’t disappeared.

A year from now, this Christmas might well be seen as the start of a new leg up for stocks. Or it could be seen, in hindsight, as the calm before the storm. We won’t know which for a few more months, so we might as well enjoy the festive season while it lasts.

—Brian Swint

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Congress Returns to Take Up Israel, Ukraine Funding Requests

Both the House and Senate return to Capitol Hill this week, facing unresolved issues including a temporary government funding measure due to expire in January and President Joe Biden’s $106 billion funding request for aid to Israel, Ukraine, and the U.S. southern border, among other measures.

• Analyst Terry Haines, founder of Pangaea Policy, calls full funding for Israel, Ukraine, and U.S. border security “75% likely by Christmas, but not before.” He expects that Democrats will end up making concessions on border policy, to secure aid for Israel and Ukraine, MarketWatch reported.

• Hamas released 17 additional hostages on Sunday, including a four-year-old U.S. dual citizen. So far, 58 hostages have been freed since a temporary pause in fighting began on Friday. Biden said Sunday the U.S. was hoping to extend that pause to secure the release of more hostages.

• Israel has agreed to extend the pause in the fighting by another 24 hours for every 10 hostages Hamas releases, and to release more imprisoned Palestinian women and children. Hamas also said it would agree to an extension to the pause, The Wall Street Journal reported.

• Rep. Ro Khanna (D., Calif.) told ABC’s This Week that he supports aid for Israel’s Iron Dome missile defense system and defensive equipment, but said the U.S. needs to enforce the Leahy Law that said U.S. aid needs to be consistent with international human rights law.

What’s Next: Senate Majority Leader Chuck Schumer said Sunday he expects to bring Biden’s request for Israel and Ukraine aid, plus other national security priorities, to a floor vote as soon as the week of Dec. 4. Negotiations between Republicans and Democrats continued through the Thanksgiving break.

—Janet H. Cho

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Cyber Monday Spending Expected to Set Holiday Records

Adobe Analytics expects consumers to spend a record $12 billion on Cyber Monday today, after spending a record $9.8 billion on Black Friday, and $10 billion over the weekend. Consumers are continuing to spend, defying cautious retailer outlooks amid inflation and economic uncertainty.

• Global online Black Friday sales reached $70.9 billion globally, an 8% increase from 2022, according to data from
  Salesforce.
  U.S. online sales rose 9% to $16.4 billion. Footwear, health and beauty, skin care, and sporting goods were among high-performing categories, Salesforce said.

• Retail e-commerce hosting site
  Shopify
  said its merchants saw a 22% increase in global sales from one year ago, to a record $4.1 billion. Adobe noted that Buy Now, Pay Later orders rose 72% for Nov. 18 to Nov. 24 from the week before, and revenue rose 47%.

• U.S. retail sales on Black Friday rose 2.5% from last year, according to Mastercard SpendingPulse, boosted by gains in sales of jewelry and apparel as well as spending on sporting events and at restaurants.

• Consumers are relying less on store-branded cards these days, once a lucrative source of income for retailers. Private-label card originations fell 37% last year compared with 2015, while general-purpose credit cards grew 33%, the Consumer Financial Protection Bureau reported.

What’s Next: Credit card issuers face another potential hit to revenue. The CFPB has proposed capping credit card late fees at $8, compared with $41 now, as part of the Biden administration’s efforts to eradicate junk fees. The CFPB estimates reducing late fees could save consumers $9 billion a year.

—Janet H. Cho and Matt Bemer

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OPEC Reaches Limits of Its Power Ahead of Meeting

Oil prices were falling early Monday as members of the Organization of the Petroleum Exporting Countries prepared to meet later this week.

• The OPEC meeting was supposed to be held over the weekend and has now been moved to Thursday, and will take place online rather than in person.

• The group is expected to either extend current output restrictions or lower output further, if not at this meeting then soon. Oil prices are down about 7% this year.

• The reason for rescheduling the meeting was that Nigeria and Angola are pushing for a higher output allowance, Reuters reported. Both countries were given lower allowances in June after previously not being able to pump enough to meet their quotas.

What’s Next: While OPEC is still expected to come to an agreement by Thursday, the disagreement shows the strains the bloc faces to keep all its members happy. All oil producers benefit from higher prices, but countries also want to sell as much oil as possible to maximize revenue. This meeting could be a preview of further disagreements ahead.

—Brian Swint

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Disney’s
Thanksgiving Weekend Box Office Sales Disappoint

Walt Disney’s
latest animated feature film Wish came up short at the holiday weekend box office, dealing the company another cinematic blow just three weeks after the disappointing debut of The Marvels. But
Comscore’s
Paul Dergarabedian said the holiday showed the movie industry was rebounding.

• Coming in first for the three-day holiday weekend was
  Lionsgate Films
  ’ The Hunger Games: The Ballad of Songbirds & Snakes, Comscore said. It took in another $28.8 million domestically in its second week, while
  Sony’s
  Napoleon opened in second with domestic sales of $20.4 million.

• Disney’s Wish was third with $19.5 million in domestic ticket sales, Comscore said. For the five-day weekend, sales were $31.7 million. Both fell short of expectations. Disney once ruled the Thanksgiving holiday weekend, so the showing was “disappointing,” said Dergarabedian, Comscore’s senior media analyst.

• Comcast
  -owned Universal’s Trolls Band Together was fourth over Thanksgiving weekend, notching $17.5 million in domestic box office sales, while Sony’s Thanksgiving came in fifth, with sales of $7.1 million.

• Overall, the five-day holiday weekend, starting Wednesday and going through Sunday, saw an estimated $172 million in domestic box office sales, Comscore said. That’s lower than the $315.6 million in sales in 2018, the record. But it’s up from $122.8 million last year.

What’s Next: Right now 2023 domestic box office sales have reached $8.242 billion, edging closer to expectations the industry can reach $9 billion in sales this year, Comscore’s Dergarabedian said.

—Liz Moyer

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Sunday Air Travel Numbers Expected to Be Highest Ever

Nearly 3 million people were expected to return home on Sunday, which would make it the busiest day ever for U.S. air travel, according to the Transportation Security Administration, eclipsing the previous record of nearly 2.9 million who passed through airport checkpoints on June 30.

• TSA expected this holiday season to be its busiest ever, with projections it would screen 30 million passengers between Nov. 17 and 28. More than 17 million had passed through airport security checkpoints by Nov. 23, including 2.7 million travelers on the Wednesday before Thanksgiving.

• Chicago’s O’Hare International Airport and Midway Airport expected a combined 300,000 passengers on Sunday; and Los Angeles International Airport expected 225,000 passengers, The Wall Street Journal reported.

• Just 55 flights into, around, or out of the U.S. were canceled, and more than 7,300 flights were delayed, according to aviation-data service FlightAware. Monday, 22 U.S. flights have been canceled as of 5.30 a.m. Eastern time.

• New York’s JFK airport was the worst affected origin airport Sunday, with 274 flights delayed, or 37% of the schedule. Boston’s Logan International was the most impacted destination airport as 173 flights, or 25% of the schedule were delayed.

What’s Next: A fast-moving storm headed for the Northeast could bring heavy rain to Philadelphia, New York, and Boston today, National Weather Service meteorologist Marc Chenard said. Parts of Western New York and Michigan could see snow this week, he said.

—Janet H. Cho and Callum Keown

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MarketWatch Wants to Hear From you.

Both the House and Senate are due to get back to work this week after their Thanksgiving break, and lawmakers have a lot on their plates, including possible funding for Israel and Ukraine aid, a tax package, and other annual spending priorities. What chances do analysts give for these legislative efforts?

A MarketWatch correspondent will answer this question soon. Meanwhile, send any questions you would like answered to [email protected].

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—Newsletter edited by Liz Moyer, Patrick O’Donnell, Rupert Steiner