Consumer Confidence Takes a Holiday: Markets, Mood Swings, and Monday Blues

Brett Hall
Dec 23, 2024
4 min read

It’s that time of year again—holiday music in every store, overbooked flights, and Wall Street traders wondering if they’ll make their bonus targets before the year ends.

Unfortunately, Monday wasn’t exactly the start investors were hoping for, as U.S. consumer confidence data came in weaker than expected, triggering a round of market malaise.

Consumer Confidence Gets a Lump of Coal

For the first time in three months, U.S. consumer confidence dipped, as Americans began questioning the outlook for the economy, their income prospects, and whether they could afford one more streaming subscription. This isn’t just bad news for retailers—it’s a signal that the economy’s glow may be dimming faster than holiday string lights on January 2.

Neil Dutta, of Renaissance Macro Research, chimed in with his ever-cheerful take:“The economic outlook is deteriorating. This was true before the Fed’s December confab and remains true after.”

Translation? Things weren’t great, and they still aren’t. But Dutta wasn’t finished:“There’s much more downside to growth than upside heading into 2025. Even a modest selloff could trigger a meaningful slowdown in consumer spending.”

This isn’t exactly the stuff of holiday cheer. If consumer confidence is a car, it just ran out of gas—right in front of a “No Stopping” sign.

Wall Street’s Trading Blues: A Confidence Crisis or a Volume Problem?

Monday’s market mood felt like trying to make small talk at a work holiday party—awkward and unenthusiastic. Stocks dropped across most sectors in the S&P 500, with the index sliding 0.2%. The Dow Jones Industrial Average was even grumpier, falling 0.6%.

Meanwhile, tech stocks in the Nasdaq 100 continued their stoic march, remaining flat because AI and semiconductors, apparently, are above such petty concerns. Small caps in the Russell 2000, however, weren’t as lucky, tumbling 0.6% as economically sensitive stocks bore the brunt of the selloff.

Thin Trading: Let’s not ignore the elephant in the room—trading volumes were thin, which means the market lacked conviction. Or, as a seasoned trader might say, “No one wants to make a big move when the boss is on vacation.” With most investors already mentally checked out for the holidays, the slightest bad news carries outsized impact.

Morgan Stanley’s Contrarian Wisdom: Negative Breadth is a Non-Issue

Morgan Stanley’s Michael Wilson decided to zig while others zagged, arguing that negative breadth—when more stocks fall than rise—might not matter in high-quality indexes with strong price momentum.

“This all helps to explain the extreme concentration we’re seeing in many equity markets,” Wilson noted. “The anomaly between breadth and price that so many are highlighting could normalize if/when the abundance of liquidity subsides.”

In plain English? The market’s big winners (tech giants, mainly) are carrying the load, while everyone else just hangs on for dear life. It’s like a group project where one overachiever does all the work, and the rest of the class nods along.

Corporate Highlights: Deals, Disputes, and Drama

It wouldn’t be a proper market day without some juicy corporate headlines. Here’s the roundup:

Qualcomm vs. ArmQualcomm triumphed in a legal battle with Arm Holdings, proving that when it comes to chip technology, the courtroom can be as cutthroat as the boardroom.
Nordstrom Goes PrivateIn a $6.25 billion all-cash deal, Nordstrom’s founding family is taking the company private. The rationale? They think they’ll do better without quarterly earnings calls breathing down their necks.
Rumble Gets a Crypto BoostTether announced it’s acquiring a stake in Rumble for $7.50 per share, bringing two niche players together in a deal that screams, “We’re countercultural, and we know it.”
Hyatt Eyes Playa HotelsHyatt Hotels is in exclusive talks to acquire Playa Hotels, betting that all-inclusive resorts are the future of vacationing. Spoiler: they probably are.
The Container Store Declares BankruptcyFacing mounting debt and losses, The Container Store has filed for bankruptcy. Turns out, even perfectly organized shelves couldn’t save them from financial chaos.
Honda and Nissan Talk MergerIn a move that could reshape the auto industry, Honda and Nissan are considering a merger to fend off aggressive Chinese competition. It’s like a buddy comedy where rivals team up to take on a common enemy.

Economic Data: Mixed Messages from the Housing Market

On the economic front, new-home sales rebounded, with builders finally closing deals delayed by storms in the South. Heavy discounts and incentives played a role, because who doesn’t love a good year-end sale?

This rebound highlights a key trend: even as consumer confidence wanes, certain sectors (like housing) are finding ways to weather the storm—at least for now.

Currencies, Commodities, and Crypto: A Rollercoaster Ride

Currencies

The euro fell 0.3% to $1.0394.
The British pound slipped to $1.2528.
The Japanese yen dropped 0.5% to 157.14 per dollar.

Cryptocurrencies

Bitcoin declined 2%, landing at $93,186.14.
Ether held steady at $3,284.25.

Commodities

WTI Crude Oil fell 1% to $68.77 per barrel, as global demand worries outweighed supply cuts.
Gold edged down 0.4% to $2,612.74 per ounce, reminding everyone that even safe havens have bad days.

The Road Ahead: A Holiday Week with Big Questions

This week is short on trading days but not on potential drama. Key events to watch include:

U.S. Initial Jobless Claims (Thursday): Will the labor market show cracks?
Japan CPI and Unemployment Data (Friday): A barometer for Asia’s economic health.
U.S. Goods Trade Report (Friday): A snapshot of how global trade is holding up.

Final Thoughts: Confidence is Fragile, and So Are Markets

Monday’s weak consumer confidence data served as a stark reminder of just how precarious things are. Between holiday spending pressures, Fed uncertainty, and rising global competition, it’s no wonder investors are hesitant.

But let’s keep perspective. Markets often overreact to data points in low-volume weeks. Whether this stumble turns into a slide or just a hiccup depends on what happens next—both on Main Street and in the Fed’s boardroom.