Market Recap: S&P 500 and Nasdaq Surge, Dow Wavers as Fed Decision Looms
Why Was the Market Up Today? Tech Stocks and Fed Anticipation Drive Gains
The U.S. stock market closed on a positive note on Monday, December 16, 2024, with the S&P 500 and Nasdaq Composite reaching new heights while the Dow Jones Industrial Average struggled to maintain momentum. Investors’ attention was firmly fixed on the upcoming Federal Reserve decision, driving optimism in the tech sector and pushing major indexes higher.
Market Performance: A Mixed Bag of Gains and Losses
As the closing bell rang, the S&P 500 (^GSPC) climbed 0.50%, setting a new record and extending its impressive run. The tech-heavy Nasdaq Composite (^IXIC) surged 1.18%, breaking above the 20,000-point milestone for the first time in history. However, the Dow Jones Industrial Average (^DJI) dipped 0.05%, at risk of marking its eighth consecutive day of losses.
Fed Watch: Investors Brace for Potential Rate Cut
The market’s upward trajectory was largely fueled by anticipation of the Federal Reserve’s final rate decision of the year, scheduled for Wednesday. Traders are pricing in a 97% chance of a 25 basis point rate reduction, according to CME’s FedWatch tool. However, the focus remains on the Fed’s outlook for 2025, with investors eager to see if policymakers will adjust their “dot plot” forecasts in light of persistent inflation and strong economic growth.
Economic Data Paints a Rosy Picture
Adding to the positive sentiment, the latest S&P Global flash US composite PMI data showed economic output hitting its highest level in nearly three years. The composite PMI rose to 56.6 in December, up from 54.9 in August, driven by increased activity in the services sector. This robust performance suggests the U.S. economy is growing at an annualized rate of just over 3% in December.
Tech Stocks Lead the Charge
The technology sector was the star performer of the day, with several notable companies reaching new milestones:
1. Tesla (TSLA) surged over 5%, pushing its market capitalization close to $1.5 trillion.
2. Broadcom (AVGO) gained more than 9%, surpassing the $1 trillion market cap mark.
3. Alphabet (GOOGL, GOOG) rose more than 5%, hitting fresh record highs.
Cryptocurrency Boom: Bitcoin Breaks Records
The cryptocurrency market also made headlines, with Bitcoin surging past $107,000. This remarkable 50% gain since the presidential election has been attributed to optimism surrounding the incoming Trump administration’s potential crypto-friendly policies. MicroStrategy (MSTR), one of the world’s largest Bitcoin holders, saw its shares climb 6% on the news of its inclusion in the Nasdaq 100 Index.
Looking Ahead: Key Events to Watch
As investors digest today’s gains, attention turns to several upcoming economic indicators:
1. The Federal Reserve’s rate decision and updated economic projections on Wednesday.
2. S&P Global’s December flash manufacturing and services PMIs.
3. Industrial production figures and retail sales data.
4. Personal Consumption Expenditures (PCE) index – the Fed’s preferred inflation gauge.
Market Movers: Stocks Making Headlines
– MicroStrategy (MSTR), Palantir (PLTR), and Axon Enterprise (AXON) are set to join the Nasdaq 100 Index next Monday.
– Super Micro Computer (SMCI) dropped over 6% as it faces removal from the Nasdaq 100.
– Coinbase Global (COIN) and MARA Holdings (MARA) benefited from the Bitcoin rally, gaining 2.6% and 3.8% respectively.
As the market prepares for a crucial week ahead, today’s stock market recap underscores the delicate balance between optimism surrounding potential rate cuts and caution over economic indicators. Investors will be closely monitoring the Federal Reserve’s decision and guidance, which could set the tone for market performance as we approach the end of 2024.
