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We saw another positive day in the stock market this Hump Day — not as promising as when the opening bell sounded, perhaps, but substantial nevertheless. The Dow grew by another +130 points, +0.30%, while the S&P doubled that: +0.61%. The tech-heavy Nasdaq led the way again — +251 points, +1.27%, but the small-cap Russell 2000 slid -14 points on the day, -0.62%.

The S&P came close to closing at a new all-time high today at 6,086, but was just a few points shy of the record close on December 6th of last year. In fact, valuations are beginning to get a bit lofty again, with all the major indexes up roughly +5% from the lows set a week and a half ago. We know the new Trump administration promises big growth, but at what point will investors demand to see proof before putting more money to work as levels climb higher?

Q4 earnings season will play a big part in determining this, and in fact already has. Big banks on Wall Street like Citigroup (C - Free Report) put up very healthy quarterly numbers, while just yesterday Netflix (NFLX - Free Report) posted its best quarterly results in years, with raised guidance on price hikes across the board. That said, we’re still fairly early in the Q4 earnings cycle — there will be plenty more hay to make of results as the weeks pass by.

Leading Economic Indicators Weaken, as Expected
 

U.S. Leading Economic Indicators (LEI) for December came out earlier in the trading session, with a headline coming in weaker than the previous month: -0.1%, as expected. This is a half-point lower than the upwardly revised +0.4% the previous month. The second-half of 2024 improved to -1.3% from -1.7% in the first half, but still riding in the negative.

The LEI had been closely watched for indications of an economic recession, but even with these numbers sliding downhill over the past three years ago, there are no outward signs of a pending recession on the horizon. (Perhaps we should reconsider which indicators are being used to determine LEI.) U.S. real GDP — as opposed to nominal GDP — is expected to expand +2.3% in 2025. Not great, but clearly not recessionary — in fact, it’s pretty close to where the Fed wants to see economic growth.

What to Expect from the Stock Market Tomorrow
 

Again, we’re tame on economic reads. Weekly Jobless Claims are the only report we expect Thursday morning that’s not earnings-related. New claims are still very well-behaved: only 221K new jobless claims are expected, up slightly from 217K reported the prior week. Continuing Claims came in at 1.86 million in the last print, notably lower than the two 1.9 million reads we’ve seen over the past few months. Will the numbers continue to be tepid, or might the fire devastation in LA temporarily crack these new jobless numbers higher for a time?

American Airlines (AAL - Free Report) and GE Aerospace (GE - Free Report) are among a new slew of companies reporting earnings tomorrow morning, with Texas Instruments (TXN - Free Report), Intuitive Surgical (ISRG - Free Report), and CSX (CSX - Free Report) all putting out earnings reports after tomorrow’s close. For the big players like Apple (AAPL - Free Report) and Alphabet (GOOGL - Free Report), we’ll have to wait another week.

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