Market Recap: S&P 500 and Nasdaq Edge Higher, Dow Slips Amid Rate Cut Speculation
Major Indexes Performance
As of Monday, December 23, 2024, the U.S. stock market showed mixed performance in a holiday-shortened week. The S&P 500 (^GSPC) gained 0.55% to 5,963.39, while the Nasdaq Composite (^IXIC) rose 0.90% to 19,748.39. However, the Dow Jones Industrial Average (^DJI) slipped 0.04% to 42,824.66. This choppy trading session comes after a recent rally fueled by optimism about potential interest rate cuts in 2025.
Market Sentiment and Federal Reserve Outlook
Investors are closely monitoring the Federal Reserve’s stance on interest rates. Money markets currently anticipate approximately two 25-basis-point rate reductions in 2025, which would bring the benchmark rate to a range of 3.75% to 4.0%. This expectation is slightly more conservative than previous projections, reflecting the Fed’s recent forecast of fewer rate cuts than initially anticipated.
A cooler-than-expected inflation report released last Friday provided some relief to the markets, helping U.S. stocks recoup some of their recent losses. However, overall market sentiment remains cautious, as noted by Thierry Wizman, strategist at Macquarie.
Upcoming Market Events
With the holiday season in full swing, this week’s economic calendar is relatively light. U.S. stock markets will close early on Tuesday and remain shut for Christmas on Wednesday. Investors should keep an eye on the following:
1. Federal Reserve minutes: While no Fed speeches are scheduled, minutes from recent central bank meetings are due this week.
2. Secondary U.S. economic data releases.
3. The potential for a “Santa Claus Rally”: Historically, the last five trading days of the year and the first two of the following year have yielded an average S&P 500 gain of 1.3%.
Major Stock News
Several notable stocks made headlines on Monday:
1. Nvidia (NVDA): The chipmaker’s shares rose 3.25%, contributing to the Nasdaq’s positive performance.
2. Meta Platforms (META): The tech giant saw a 1.4% increase in its stock price.
3. Apple (AAPL): The world’s most valuable company inched closer to a $4 trillion market capitalization, currently standing at $3.84 trillion.
4. Qualcomm (QCOM): Shares climbed 1.7% after a favorable jury decision in a licensing dispute with Arm Holdings.
5. Eli Lilly (LLY): The pharmaceutical company gained 1.7% following FDA approval of its weight-loss treatment, Zepbound, for obstructive sleep apnea.
6. Walmart (WMT): The retail giant’s stock fell 3.3% amid accusations from a U.S. consumer finance watchdog regarding junk fees imposed on delivery drivers.
Market Breadth and Sector Performance
Market breadth leaned negative, with declining issues outnumbering advancers. On the NYSE, the ratio was 2.56-to-1, while on the Nasdaq, it was 1.91-to-1. The S&P 500 posted two new 52-week highs and 11 new lows, while the Nasdaq Composite recorded 35 new highs and 86 new lows.
Global Market Influences
Asian markets rallied earlier in the day, with Japan’s Nikkei gaining 0.7% and South Korea’s KOSPI firming 0.9%. This positive sentiment was partially driven by the benign U.S. inflation reading and relief over the averted government shutdown in Washington.
Looking Ahead
As we approach the end of 2024, investors should remain vigilant about several factors:
1. The Federal Reserve’s rate cut trajectory and its impact on various asset classes.
2. Potential market volatility due to thin holiday trading volumes.
3. Ongoing geopolitical tensions and their effects on global trade and economies.
4. The performance of key sectors, particularly technology and healthcare, which have shown resilience in recent trading sessions.
In conclusion, while the market shows signs of optimism, caution remains the watchword as investors navigate the complex interplay of economic data, central bank policies, and global events shaping the financial landscape as we move into 2025.
