Stock Market Today: Fed Meeting Looms as Markets Brace for Potential Rate Cut
As we dive into the stock market landscape on Tuesday, December 17, 2024, investors are holding their breath for the Federal Reserve’s final meeting of the year. The market has shown impressive gains throughout 2024, but recent days have seen a pause in the rally as traders anticipate the Fed’s decision and future outlook.
Current Market Performance
The stock market has demonstrated remarkable resilience in 2024, with major indexes posting significant gains:
– The S&P 500 is up an impressive 27% year-to-date, on track for back-to-back yearly gains of more than 20% for 2023 and 2024.
– The Nasdaq Composite has surged by 32.7%, reaching new record highs.
– The Dow Jones Industrial Average has climbed 16.3%, despite recent pullbacks.
However, the market’s momentum has slowed in recent days. The Dow logged its seventh consecutive session of declines on Friday, marking its longest losing streak since February 2020. This has sparked discussions about a potential market correction.
Fed Meeting and Rate Cut Expectations
The Federal Reserve’s two-day policy meeting, concluding on Wednesday, December 18, is the week’s main event. Market expectations are high for a 25 basis point cut in the benchmark interest rate. This would bring the Fed’s short-term rate to a range of 4.25% to 4.5%, about 1% above what many on Wall Street consider the “terminal range.”
Talley Leger, chief market strategist at the Wealth Consulting Group, commented, “This environment is feeling a lot like the mid-1990s,” drawing parallels to the period when the Fed was cutting rates into a favorable economic environment.
However, some analysts caution that the Fed may take a more selective approach to rate cuts in 2025, especially if inflation remains stubborn. George Cipolloni, portfolio manager at Penn Mutual Asset Management, noted, “There are certain indicators showing inflation is not going away as quickly as hoped.”
Upcoming Economic Data and Events
Several key economic indicators are scheduled for release this week:
– Retail Sales Data (December 17): Expected to show a 0.5% monthly increase, providing insights into consumer spending habits.
– Manufacturing Updates (December 18)
– Home Starts Data (December 19)
– Revised GDP for Q2 (December 20)
– PCE Inflation Gauge (December 21): The Fed’s preferred measure of inflation
These reports will offer valuable insights into the health of the U.S. economy and may influence market sentiment in the coming days.
Major Stock News and Movements
– Tech Giants: Nvidia (NVDA) was down 2.1% in premarket trading, while Microsoft dipped 0.4%. However, Tesla (TSLA) showed strength, up nearly 3% after rallying more than 6% in the previous session.
– Crypto-Related Stocks: With Bitcoin surpassing $107,000, crypto-focused stocks like Hut 8 (HUT), MARA Holdings (MARA), and Riot Platforms (RIOT) all rose more than 2% in premarket trading.
– Albertsons Companies (ACI): The stock rose 1% after multiple brokerages hiked their price targets, with Telsey Advisory Group upgrading it to “outperform” from “market perform.”
Market Outlook and Investor Sentiment
While the market has shown impressive gains in 2024, some analysts are cautioning about potential headwinds. David Laut, chief investment officer at Abound Financial, suggested a more balanced approach, saying, “Why not take some money off the table, move down the multiples spectrum?”
The concentration of gains in a small group of mega-cap technology stocks, known as the “Magnificent Seven,” has raised concerns about market fragility. For every dollar invested in November in the SPDR S&P 500 ETF Trust (SPY), 31 cents were allocated to these top performers.
As we head into 2025, investors should remain vigilant. While the stock market rally may have legs, as suggested by some analysts, it’s crucial to consider potential risks such as persistent inflation, geopolitical tensions, and the impact of President-elect Donald Trump’s policies on trade and corporate taxes.
In conclusion, as the market braces for the Fed’s decision and digests a flurry of economic data, investors should stay informed and consider a diversified approach to navigate the potentially turbulent waters ahead in the stock market.
