Stocks tanked, the price of oil fell, and bonds rallied on Friday. For the week, the Dow lost 3.7%, the blue chip index’s worst week since November 2011. The S&P 500 lost 3.5%, its worst week since May 2012, and the Nasdaq lost 2.7% during the week.

First, the scoreboard:

  • Dow: 17,287.7, -309, (-1.7%)
  • S&P 500: 2,002.4, -32.9, (-1.6%)
  • Nasdaq: 4,653.6, -54.5, (-1.1%)

And now, the top stories on Friday:

1. Oil was the big story again on Friday. West Texas Intermediate crude oil futures fell below $US58 a barrel for the first time since May 2009 as crude oil continues to tumble. After starting the week at around $US65 a barrel, WTI fell more than $US7 over the course of the week. Brent crude oil, the international benchmark, also made new lows, falling below $US62 a barrel.

2. As oil sold off and stocks fell, US Treasury bonds, seen as one of the safest investments an investor can make, continued to rally, with long-date bonds the big winners. The yield on the 10-year Treasury bond fell below 2.1% on Friday and settled at a new low for the year of 2.08%. The 30-year bond also rallied, falling to 2.74%, the lowest yield in over two years. 

3. Bond yields around the world are falling, with German bond yields going negative for durations out to four years and the 10-year bund making a new record low of 0.623% on Friday. 

4. On Friday, the University of Michigan’s preliminary reading on consumer confidence for the month of December came in at a nearly 8-year high of 93.8, blowing away expectations for an 89.5 reading. Following the report, Paul Dales at Capital Economics said that coupled with Thursday’s better than expected retail sales report, the holiday shopping season looks like it could be the strongest in nine years. Deutsche Bank’s Torsten Slok also circulated a chart showing that those in the lowest third of household incomes had the biggest rise in confidence this month, bolstering prospects for a strong holiday season. 

5. Producer prices in November fell more than expected, declining 0.2% against expectations for a 0.1% decline. According to the BLS, sixty per cent of the decline in prices for final demand goods can be attributed to the index for gasoline, which dropped 6.3%. 

6. In Federal Reserve news, noted dove Narayana Kocherlakota announced that he will stepping down from his post as president of the Minneapolis Federal Reserve in 2016. Kocherlakota has recently been a dissenter at FOMC meetings, urging the Committee to favour a more accommodative policy than the Fed has currently pursued. The Fed will hold its last meeting of the year next week, making its final monetary policy announcement of 2014 on Wednesday.

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