Market Recap: S&P 500, Nasdaq Retreat from Record Highs as Fed Decision Looms
The U.S. stock market experienced a mixed session on Tuesday, December 17, 2024, as investors eagerly awaited the Federal Reserve’s final rate decision of the year. The S&P 500 (^GSPC) fell 0.4% to 6,050.61, retreating from its recent all-time high. The Dow Jones Industrial Average (^DJI) dropped 0.61% to 43,449.90, marking its eighth consecutive day of losses—the longest losing streak since 2018. Meanwhile, the Nasdaq Composite (^IXIC) edged down 0.32% to 20,109.06, pulling back from the record high set the previous day.
Why Was the Market Down Today?
Several factors contributed to today’s market performance:
1. Fed Rate Decision Anticipation: Investors are bracing for the Federal Reserve’s announcement on Wednesday. While a 25 basis point cut is widely expected, market participants are keenly awaiting guidance on future policy moves.
2. Strong Retail Sales Data: November retail sales data, released before the market opened, showed a 0.5% increase month-over-month, in line with economists’ expectations. This robust consumer spending data may influence the Fed’s decision-making process.
3. Rising Treasury Yields: The yield on the 10-year Treasury note climbed above 4.42%, reaching a three-week high. This increase in yields put pressure on growth stocks, particularly in the technology sector.
4. Nvidia’s Correction: The AI chip giant Nvidia (NVDA) fell into correction territory, ending the day about 11% off its recent closing high. This pullback in a key market leader weighed on overall sentiment.
Major Stock Movements
Several notable stocks made headlines today:
– Tesla (TSLA): The electric vehicle maker saw its stock rise nearly 3% in premarket trading, building on the previous day’s 6% rally.
– Broadcom (AVGO): The semiconductor company hit a new high, gaining about 11% and reaching a market capitalization above $1 trillion.
– Albertsons Companies (ACI): The grocery chain saw its stock rise 1% after multiple brokerages raised their price targets, with Telsey Advisory Group upgrading it to “outperform.”
– Crypto-related stocks: Companies like Hut 8 (HUT), Marathon Digital Holdings (MARA), and Riot Platforms (RIOT) all rose more than 2% as Bitcoin surpassed $107,000.
Upcoming Market Events
Investors should keep an eye on these key events in the coming days:
1. Federal Reserve Rate Decision: The Fed’s announcement on Wednesday will be crucial for market direction. While a rate cut is expected, the focus will be on the central bank’s projections for 2025.
2. TikTok Ban Decision: The popular social media app has asked the Supreme Court to block a law that could effectively ban it in the U.S. by January 19, 2025. This decision could impact tech stocks and social media companies.
3. Earnings Reports: While not specified in the search results, investors should watch for any major earnings announcements that could move the market in the coming days.
Market Outlook
Despite today’s pullback, the U.S. stock market remains on track for a strong year-end performance. The S&P 500 is up over 27% year-to-date, poised for its best year since 2019. However, investors should remain cautious due to several factors:
– Inflation Concerns: If inflation persists above the Fed’s target in the new year, the market may be overly optimistic about the number of rate cuts in 2025.
– Sector Rotation: The market is recognizing that there are other AI beneficiaries besides Nvidia, which could lead to shifts in sector leadership.
– Political Uncertainty: With President-elect Donald Trump set to take office, his policies could significantly impact various sectors, including technology and international trade.
As we approach the end of 2024, investors should stay informed about these key market drivers and maintain a diversified portfolio to navigate potential volatility in the coming year.
