Market Recap: S&P 500 and Nasdaq Surge, Fed Decision Looms
The U.S. stock market closed on a positive note on Monday, December 16, 2024, with two of the three major indexes posting gains as investors eagerly await the Federal Reserve’s final policy decision of the year. The S&P 500 and Nasdaq Composite continued their upward trajectory, while the Dow Jones Industrial Average struggled to maintain momentum.
Market Performance
The S&P 500 (^GSPC) climbed 0.50% to close at 6,081.48, extending its impressive run and inching closer to new record highs. The Nasdaq Composite (^IXIC) outperformed, surging 1.19% to 20,163.63, driven by strong performances in the technology sector. However, the Dow Jones Industrial Average (^DJI) slipped marginally by 0.05% to 43,806.96, marking its potential eighth consecutive day of losses.
Fed Watch and Economic Indicators
All eyes are on the Federal Reserve as it prepares for its final meeting of 2024, scheduled for December 17-18. Market participants are pricing in a 97% probability of a 25 basis point rate cut, which would bring the target range down to 4.25-4.50%. This anticipated move reflects the Fed’s ongoing efforts to manage inflation while maintaining economic stability.
Adding to the economic narrative, S&P Global’s flash U.S. composite PMI data released today showed encouraging signs. The index rose to 56.6 in December, up from 54.9 in August, indicating the fastest pace of economic growth in nearly three years. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that this performance is “consistent with GDP rising at an annualized rate of just over 3% in December.”
Sector Highlights and Stock Movers
The technology sector continued to lead the market’s gains, with several notable stocks hitting new highs:
1. Tesla (TSLA) surged over 5%, pushing its market capitalization close to $1.5 trillion.
2. Broadcom (AVGO) jumped more than 9%, surpassing the $1 trillion market cap milestone.
3. Alphabet (GOOGL, GOOG) rose more than 5%, reaching fresh record levels.
4. MicroStrategy (MSTR) gained 6%, boosted by bitcoin’s rally and its upcoming inclusion in the Nasdaq 100 Index.
Cryptocurrency Surge
Bitcoin (BTC-USD) made headlines by breaching the $107,000 mark, setting a new all-time high. The cryptocurrency’s impressive 50% gain since the recent presidential election reflects growing optimism about potential crypto-friendly policies under the incoming Trump administration.
Upcoming Market Catalysts
Investors are bracing for a data-heavy week that could significantly impact market sentiment:
1. The Federal Reserve’s interest rate decision and updated economic projections on Wednesday.
2. Release of the Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge.
3. November retail sales data, offering insights into consumer spending habits.
Global Market Influences
International factors are also playing a role in market dynamics. China’s recent retail sales data fell short of forecasts, putting pressure on oil prices. Brent crude hovered near $74 a barrel, while West Texas Intermediate dipped below $71.
Looking Ahead
As the market digests these developments, all attention will be on the Federal Reserve’s decision and commentary. Investors are particularly interested in the updated “dot plot,” which could provide insights into the central bank’s rate cut projections for 2025. The persistence of inflation and potential policy shifts under the new administration will be key factors influencing the Fed’s outlook.
In conclusion, the U.S. stock market remains resilient, with technology stocks driving much of the gains. As we approach the year’s end, the interplay between monetary policy, economic data, and geopolitical factors will continue to shape market trends. Investors should stay alert to these key indicators and policy decisions in the coming days, which could set the tone for market performance heading into 2025.
