FOMC & OPEX
DJIA 52-wk: +17.49% YTD: +16.29% Wkly: -1.82%
S&P 500 52-wk: +28.22% YTD +26.86% Wkly: -0.84%
NASDAQ 52-wk: +34.51% YTD: +32.74% Wkly: +0.34%
iShares S&P Value ETF: 52-wk: +14.84% YTD: +13.85% Wkly: -1.95%
MARKET RECAP 12/9/12/16:
The U.S. stock market experienced mixed results during the week of December 9-13, 2024. The
S&P 500 and the Nasdaq Composite saw slight gains, while the Dow Jones Industrial Average
ended relatively flat. The market's performance reflected cautious optimism amid cooling inflation, Federal Reserve policy updates, and sector-specific developments.
1) Federal Reserve Outlook: While inflation data showed signs of moderation, the Federal
Reserve signaled a cautious approach to monetary policy. Market participants are now
anticipating a slower pace of rate cuts in 2025, as the Fed balances reducing inflation and
sustaining economic growth.
2) Sector Highlights:
3) Economic Data:
Reports showed robust consumer spending and better-than-expected jobless claims, underscoring the resilience of the U.S. economy. This helped lift sentiment in some areas but also raised concerns about the potential for tighter financial conditions to persist.
4) Global Dynamics:
A stronger U.S. dollar, driven by divergent monetary policies, put pressure on international equities. Meanwhile, other central banks like the European Central Bank and the Bank of Canada continued adjusting rates to stimulate their economies. The overall market environment remains complex as investors weigh optimism about economic resilience against uncertainties in global growth and central bank policies.
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THE NASDAQ RALLY:
Has been driven by a few Big Tech names like TSLA and GOOG—and their weaknesses may be masking fundamental weaknesses in the broader market. Most stocks outside of the tech industry have been in the midst of a gradual but persistent selloff. For 10 straight days through Friday, more stocks in the S&P 500 fell than rose, the longest such streak since 2000, according to Dow Jones Market Data.
COMMENTS FROM PETER ATWATER, WHO PENS THE FINANCIAL INSYGHTS NEWSLETTER:
“What we are seeing politically and in the markets is an enormous vindication trade,” he says. The so-called animal spirits did not suddenly appear with the election results but were unleashed by them. “Most notably, the crypto space to me would be ground zero for that, but you can see it in anything that has close psychological proximity to the [soon-to-be] Trump White House,” Atwater says.
And the crowd, feeling vindicated, readily rejects any counterarguments to their optimism. “If you look at the variables—lower taxes, less regulation—[investors] are imagining not only each lever that’s going to be pulled, but they’re all going to be pulled simultaneously, and to an extreme degree. The challenge is that the markets are pricing in all of that right now.”
After Inauguration Day things will get more difficult, he warns.
An observation from Hedgeye on crypto coins says that market value totaled $564.84 million this past Thursday, which was greater than 38% of all American publicly traded companies.
Atwater reveals his own positions along with his views. He has short positions in the QQQ ETF, which tracks Nasdaq.
THIS WEEKS INTERESTING SECTOR PIECE:BARRON’S OPINION
Stocks Could Gain Another 20% in 2025. Embrace the Bubble Why the Stock Market Could Gain Another 20% in 2025
CLOSING REMARKS It’s a triple expiration week (OPEX). There is usually buying associated with the unwinding of option positions before Friday’s close. Caution is warranted here because of the height of the market.
Factors this week I'm focusing on this week: 1) WED. FOMC monetary-policy decision
2) WED. Subsequent news conference after
3) FRI. PCE price index for Nov.
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