The Santa Claus Rally is officially late in arriving. With another day closing in the red, we’re now down across major market indices over the past five trading days. For today’s session, the Dow dropped another 350 points, -1.03%, the S&P 500 -1.44%, the Nasdaq was down an even -2.00% and the small-cap Russell 2000 -1.63%. All of these indices are off session lows, but not by much.

With few new economic or earnings reports to propel hopes forward, market participants are now sitting around assessing recession possibilities in 2023, and it’s pretty clear the projections aren’t looking too good. Not only fears of whether the Fed will raise interest rates so high that they’ll wind up “breaking” something in the economy, but also worries that companies will reduce earnings expectations so low that they’ll produce an “earnings recession” at some point in the new year.

We’re also seeing a continued inverted yield curve between 2-year and 10-year bonds that keeps widening — now more than 80 basis points (bps): 4.36% on 2’s, 3.52% on 10’s. Never mind we’ve been inverted most of the year — and an inverted yield-curve is an historic sign of a pending recession — but we’re going in quite the opposite direction when we’re at the widest point between these bond yields since the inversion began.

As we said in this space earlier today, perhaps the acceleration forward in the stock market will have to wait until the Fed actually raises interest rates only 50 bps instead of the 75 bps over each of the past four Fed Open Market Committee (FOMC) meetings. This had been baked into the cake last week, but it’s been evaporated over the past few trading sessions. If we get it back, we’ll still be able to call it a Santa Claus Rally, just one that’s a little tardy.

Luxury home builder Toll Brothers (TOL Quick QuoteTOL - Free Report) outperformed expectations in its fiscal Q4 report this afternoon on both top and bottom lines: earnings of $5.63 per share blew away the Zacks consensus $3.88 — helped partially by a pre-tax settlement from a gas leak in Souther California seven years ago — on revenues of $3.58 billion, topping the $3.22 billion expected. Homes sales grew +21% in the quarter, on Gross Margins of +25.5%. The company also executed a buyback of roughly 11 million shares for $542.7 million in the quarter.

The company benefited from a temporary dip in mortgage rates, from 7% previously to closer to 6.5% for a good chunk of fiscal Q4. The company also said plenty of potential homebuyers remain on the sidelines, anticipating some pent-up demand. That said, even among Toll Brothers’ well-heeled clientele, mortgage rates are indeed having a negative impact in the present quarter.

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