December 4, 2023
Rates and markets
The S&P 500 moved to new highs as investors read Federal Reserve commentary as supportive of a pause in rate hikes. The 10-year Treasury yield fell from an October level near 5% to 4.209%. Gold futures reached a record close of $2,091.70 per troy ounce, while spot gold peaked at $2,075.09 and closed at $2,072.22.
The rally was uneven. Apple rose 12% for the month and Microsoft rose 13%, while the Russell 2000 was up only 5.76% for the year compared with the S&P 500's nearly 20% gain. Smaller public companies remained more exposed to elevated borrowing costs.
Housing and spending
The S&P CoreLogic Case-Shiller National Home Price Index rose 3.9% year over year in September, reaching its highest level since the index began in 1987. The median existing home sale price rose 3.4% in October to $391,800. Detroit and San Diego posted the fastest annual growth, while Las Vegas fell 1.9%.
Canada showed more direct rate pressure. The Bank of Canada raised rates from 0.25% to 5% in 16 months. In Toronto, developers struggled with high building costs and defaulted on almost $1 billion of loans during the year. Vancouver prices increased while sales remained 30% below their 10-year average.
Black Friday online spending reached a record $9.8 billion in the U.S., up 7.5% from the prior year. Mobile shopping accounted for $5.3 billion, and buy-now-pay-later purchases reached about $79 million, up 47%. Mastercard data showed in-store sales rose just over 1%, while online sales grew 8%.
Partnership shifts
Apple moved to terminate its Goldman Sachs credit-card partnership over the next 12 to 15 months. The relationship included the Apple Card launched in 2019 and the savings account introduced in 2023. The partnership had previously been extended through 2029, but Goldman faced losses while trying to expand in consumer banking. American Express and Synchrony Financial were discussed as possible replacement partners.
AWS moved in the opposite direction by expanding AI infrastructure partnerships. The company introduced Trainium2 chips for AI model training and added access to Nvidia H200 GPUs. Nvidia and AWS also partnered to host Nvidia DGX Cloud on AWS. Microsoft was also developing its Maia 100 AI chip and planned to offer Nvidia H200 access through Azure.
Energy and IPOs
Petrobras planned to invest $102 billion by 2029, more than 70% of it toward outlay and production. The plan was 31% larger than its prior five-year plan. American Airlines also worked with Graphyte on carbon removal priced at $100 per metric ton, compared with a current average of $675.
The IPO market remained cautious. Instacart and Klaviyo traded more than 15% and 5% below their debut prices, while Arm traded about 5% above its IPO price. Reddit, Panera, and Shein were among companies reportedly preparing filings.