As consumer confidence rebounded yesterday, so did stocks, with the Dow closing up an impressive 527 points on Wednesday. However, if this is a rally, it will be a slippery one, at best.

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The S&P 500 closed at 3,878, up 57 points, the Dow closed at 33,376, up 1.6% and the Nasdaq Composite closed at 10,709, up 162 points. Most actives were all up except for Tesla (TSLA) which was down -0.2%.

 Chart: The New York Times 

In morning trading S&P 500 market futures are trading down 9 points, Dow market futures are trading down 86 points and Nasdaq 100 market futures are trading down 22 points.

The Staff at contributor Schaeffer's Research note that the Dow Jumps 526 Points On Earnings, Consumer Confidence.

"The Dow soared 526 points today, as strong earnings from retail giant Nike (NKE) boosted sentiment on Wall Street ahead of the holidays. The S&P 500 and Nasdaq finished confidently higher as well, while the Cboe Volatility Index (VIX) fell for the fourth-straight day.

Upbeat U.S. consumer confidence data also provided tailwinds, as December's consumer confidence index exceeded expectations -- jumping to an eight-month high of 108.3."

"Oil prices continued their rise after a drop in U.S. inventories. West Texas Intermediate crude for January delivery added $2.06, or 2.7%, to settle at $78.29 per barrel. 

Gold prices settled flat today, with February-dated gold settling at $1,825.40 per ounce."

TM Contributor Candy Matheson likens the slippery slope of the S&P 500 to candy canes and asks: SPX: A 4th Candy Cane For 2023?

"Will we see a fourth 'candy cane' form on the SPX in January?

If so, the target is 3200, as shown in the following weekly chart."

 Not exactly joyous tidings of the season.

But some good news is indeed, needed and Jill Mislinski reports that Consumer Confidence Bounces Back In December.

"The headline number of 108.3 was an increase of 8.1 from the final reading of 100.2 for November.

The Conference Board Consumer Confidence Index® increased in December following back-to-back monthly declines. The Index now stands at 108.3 (1985=100), up sharply from 101.4 in November. The Present Situation Index—based on consumers’ assessment of current business and labor market conditions—increased to 147.2 from 138.3 last month. The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—improved to 82.4 from 76.7. However, Expectations are still lingering around 80—a level associated with recession.

“Consumer confidence bounced back in December, reversing consecutive declines in October and November to reach its highest level since April 2022,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The Present Situation and Expectations Indexes improved due to consumers’ more favorable view regarding the economy and jobs. Inflation expectations retreated in December to their lowest level since September 2021, with recent declines in gas prices a major impetus. Vacation intentions improved but plans to purchase homes and big-ticket appliances cooled further. This shift in consumers’ preference from big-ticket items to services will continue in 2023, as will headwinds from inflation and interest rate hikes.” Read more

The chart below is another attempt to evaluate the historical context for this index as a coincident indicator of the economy. Toward this end, we have highlighted recessions and included GDP."

As always, see the full article for additional details and charts.

In a TalkMarkets "Featured Video", the Staff at Wealthion discusses U.S. home prices at length in a piece titled, The Crash In Home Prices Is Now Underway. Expect Them To Fall 30%+.

Here is some of what to expect:

"It is now hard to deny that the housing bubble 2.0 popped in 2022 as mortgage rates more than doubled.

But the fallout, especially in terms of price declines, has likely only just begun. The real damage from this bubble burst should occur over the coming year.

How bad is it likely to get?

And where will the pain be felt most?"

Video Length: 01:08:35

Inflation has certainly been the watchword all year and TalkMarkets contributor Charles Hugh Smith asks readers, What's Your Line In The Sand? The $25 Burger?

Here is some of what's on Smith's mind:

"Everyone has a line in the sand when it comes to inflated prices they refuse to pay. For one Walmart shopper I observed, it was a carton of eggs for close to $10. She announced her line in the sand verbally, with great force and sincerity.

What's your line in the sand, the point at which you simply refuse to pay the asking price? Is it the $25 burger? Or is it the $50 for two burritos and two beverages?"

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" (Could) it might be the outrageous estimate for repairing a system failure in a nearly-new vehicle that is (surprise!) no longer covered by the manufacturer's warranty. Hundreds of dollars for what?

How about $25 for a few ounces of specialty coffee beans?

Or is it $38 a pound for chocolate-covered nuts or some other confection?

Is it being stripmined to buy a hot dog and beer at a sporting event, or the "service charge" to buy a grossly overpriced ticket to a concert?

Or is it having to take out a second mortgage to cover the entrance fees to an amusement park?...

How about $2,400 a month for an ugly little flat in a new cookie-cutter apartment complex?

The gag reflex kicks in at some point and we walk away because it is no longer worth the price. Since price is set on the margins of supply and demand, all these lines in the sand will eventually become consequential."

Over in the "Where to Invest" department the Staff at ValueWalk takes a look at Federal Express and tells investors, Here’s Why You Should Steer Clear Of The FedEx Bounce.

"Shares of FedEx Corporation (FDX) are up over 5% the day after the company surprised investors with a beat on the bottom line. The $3.18 earnings per share (EPS) the company delivered was over 12% higher than analysts’ expectations for EPS of $2.82.

That’s the good news. The bad news is that the earnings beat was due to cost-cutting measures. There’s nothing wrong with companies taking such actions, particularly as the world is staring down a recession. And FedEx says it has “found” $1 billion in additional cost savings (most likely from its overbuilt ground operations) to shore up the bottom line in future quarters.

But companies can only play defense for so long. At some point, FedEx will miss on earnings if it can’t shore up its revenue base...

For the last 18 months, the stock has been in a bearish pattern of lower highs and lower lows. And that’s the story that investors need to be watching closely. The recent surge may allow for a profitable trade, but it’s not a buying signal for long-term investors.

Demand is Weakening

FedEx has been warning about lower demand since its last earnings report. This has become a familiar pattern for companies attempting to lower the bar to climb over it. But in the case of FedEx, it has more poignancy.

It was only natural that demand would slow down after 2020. As the economy reopened, demand for e-commerce was bound to move off record-high levels. But when a company such as FedEx says demand is slowing after Amazon, Inc. (AMZN) also warned of lower demand, it would be wise for investors to take notice.

Still, before this earnings report, the company was managing to beat revenue projections on a year-over-year (YOY) basis. However, the same can’t be said for the company’s earnings. This marks the second consecutive quarter that FedEx has missed earnings on a YOY basis. That is only feeding into investor expectations of an earnings recession in 2023...

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"FDX Stock is a Hold

Analysts we track continue to give FDX stock a price target of $203.92, which is a 19.5% gain from its current price. But analysts have been quick to issue price targets following the earnings report, and the reviews are mixed.

There’s a path for FDX stock to move higher. A reopening in China would help. And the company may be able to execute its cost-cutting strategy to keep earnings in line with expectations. But without a meaningful dividend to speak of, the company will have to show shareholders how it plans to deliver for them."

Caveat Emptor.

Have a good one and stay warm, cause "Baby, It's Cold Outside".

Photo: D. Marshall

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