Stock Market Recap: Wall Street Rises as Fed Decision Looms
On Wednesday, December 18, 2024, U.S. stock markets showed resilience, with major indexes climbing higher as investors eagerly awaited the Federal Reserve’s final interest rate decision of the year. The anticipation of potential rate cuts and the Fed’s outlook for 2025 dominated market sentiment, driving a cautiously optimistic trading session.
Market Performance: Indexes Rebound
As of the market close, the major U.S. stock indexes posted gains:
– The Dow Jones Industrial Average rose 0.42% to 43,633.01, breaking its nine-day losing streak—the longest since 1978.
– The S&P 500 advanced 0.35% to 6,071.85, inching closer to its recent record high.
– The Nasdaq Composite climbed 0.19% to 20,147.39, buoyed by tech sector strength.
Fed Watch: All Eyes on Powell
The day’s trading was largely influenced by anticipation of the Federal Reserve’s announcement, scheduled for 2:00 PM ET. Market participants widely expected a 25 basis point rate cut, which would bring the target federal funds rate to a range of 4.25% to 4.50%.
However, the real focus was on the Fed’s Summary of Economic Projections (SEP) and Chairman Jerome Powell’s press conference. Investors were keen to glean insights into the potential rate path for 2025, with current market expectations slightly more hawkish than the Fed’s previous projections.
Key Stocks in Focus
Several stocks made notable moves throughout the trading day:
– Nvidia (NVDA): The AI giant surged over 3% after hitting a two-month low on Tuesday, showcasing the ongoing volatility in tech stocks.
– Tesla (TSLA): The electric vehicle maker saw a 2.8% decline, following a 14% rally over the previous three sessions.
– Birkenstock (BIRK): Shares edged lower after the company forecasted fiscal 2025 revenue growth below market expectations.
Sector Performance and Market Trends
The market’s performance was mixed across sectors:
– Technology stocks showed resilience, with most rate-sensitive megacap stocks ticking higher in anticipation of potential rate cuts.
– Crypto-focused stocks faced pressure as Bitcoin fell 2%, with companies like MARA Holdings and Riot Platforms experiencing declines.
– The equal-weighted S&P 500 remained about 4% below its recent record, indicating some disparity in the broader market’s performance compared to the cap-weighted index.
Looking Ahead: Market Catalysts
As 2024 draws to a close, several factors are poised to influence market direction:
1. Fed’s 2025 Outlook: The Fed’s projections for future rate cuts will be crucial in shaping market expectations for the coming year.
2. Economic Data: Upcoming reports on housing starts, permits, and Q3 current account balance will provide further insights into economic health.
3. Corporate Earnings: Key companies like Micron Technology, Lennar, and General Mills are set to report earnings, potentially impacting sector performance.
Why Was the Market Up Today?
The market’s positive performance can be attributed to several factors:
1. Rate Cut Optimism: Expectations of a Fed rate cut and hopes for a less aggressive monetary policy in 2025 boosted investor sentiment.
2. Strong Year-End Outlook: Despite recent volatility, major indexes are on track for impressive yearly gains, with the S&P 500 up nearly 27% and the Nasdaq up about 34% in 2024.
3. Tech Sector Resilience: The rebound in key tech stocks, particularly in the AI space, provided support to broader market indexes.
As we approach the end of 2024, market participants remain cautiously optimistic, balancing the potential for continued economic growth against concerns about inflation and future monetary policy. The Federal Reserve’s decision and guidance will likely set the tone for market sentiment heading into the new year.
