?? PSW Market Wrap: December 20, 2024
Markets Surge to Recover Weekly Losses
Equities rallied on Friday, rebounding strongly from mid-week declines that saw the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite post their worst one-day losses in months. Despite the recovery, all major indices logged weekly losses due to lingering concerns over the Fed’s hawkish tone, sticky inflation, and ongoing government shutdown risks.
Closing Numbers
* Dow Jones Industrial Average: +498.02 (+1.2%) at 42,840.26
* S&P 500: +63.77 (+1.1%) at 5,930.55
* Nasdaq Composite: +199.83 (+1.0%) at 19,611.09
Weekly Performance:
* Dow: -2.3% (third consecutive weekly loss)
* S&P 500: -2.0% (second consecutive weekly loss)
* Nasdaq: -1.8% (first weekly loss in five weeks)
Key Drivers
1. Bond Yields Retreat
10-Year Yield: Fell 5 bps to 4.52%, offering relief to equity markets after sharp mid-week spikes. Phil noted earlier this week that over 4.5% is a serious danger sign.
2-Year Yield: Dropped 1 bp to 4.31%, reflecting optimism around the Fed potentially easing rates next year.
2. Fed Comments
Chicago Fed President Austan Goolsbee (2025 FOMC voter) bolstered market sentiment, suggesting rates “will come down a fair bit more” over the next 12-18 months but Phil reminded members that Gooldbee is “just one dot in the plot.”
Inflation Data: November PCE Price Index rose to 2.4% YoY, and core PCE held steady at 2.8% YoY, slightly better than consensus forecasts (2.5% and 2.9%, respectively).
3. Government Shutdown Update
House Vote on “Plan C”: Speaker Mike Johnson introduced a third funding proposal to avoid a government shutdown, backed by President-elect Donald Trump and Elon Musk. While voting began late Friday, uncertainty remains high as the bill faces bipartisan hurdles.
4. Triple Witching Day
Friday’s simultaneous expiration of stock options, index options, and index futures drove above-average trading volume, contributing to intraday volatility.
Sector Highlights
All 11 S&P 500 sectors closed higher:
Top Performers:
* Real Estate (+1.8%)
* Utilities (+1.5%)
* Information Technology (+1.5%)
* Financials (+1.4%)
Weakest Performer: None—all sectors posted gains.
Notable Dow Movers:
领英推荐
Winners:
NVIDIA (NVDA): +3.1%, leading the Dow on bullish sentiment for AI chip demand.
UnitedHealth (UNH): +2.2%, benefitting from health care sector strength.
Loser:
Nike (NKE): -0.2%, lagged after soft Q3 guidance highlighted ongoing inventory and market share struggles.
Corporate Highlights
Winners
* Enphase Energy (ENPH): +8.6%, led the S&P 500 after an analyst upgrade and positive news about battery system deployments in India.
* Palantir Technologies (PLTR): +8.5%, extended gains as it prepares to join the Nasdaq 100 next week and secured a U.S. Army contract extension.
* Carnival Corp. (CCL): +6.4%, posted strong Q4 earnings and optimistic guidance for 2025 bookings.
Losers
* Tesla (TSLA): -3.5%, declined on news of a 700,000-vehicle recall related to tire pressure monitors.
* Novo Nordisk (NVO): -18%, sank after disappointing trial results for a new obesity treatment, pressuring rivals like Eli Lilly (+1.4%).
Economic Data Recap
Personal Income & Spending (November):
* Income: +0.3% MoM (vs. +0.4% consensus).
* Spending: +0.4% MoM (vs. +0.5% consensus).
Core PCE: +0.1% MoM, unchanged at 2.8% YoY.
University of Michigan Consumer Sentiment (Final for December):
* Held steady at 74.0, reflecting consumer optimism despite higher price expectations.
Looking Ahead
Upcoming Economic Data:
* Monday: Consumer Confidence Index (December).
* Tuesday: Durable Goods Orders (November).
* Thursday: Weekly Jobless Claims.
Market Schedule:
Tuesday: Early market close at 1:00 p.m. ET for Christmas Eve.
Wednesday: Markets closed for Christmas Day.
Outlook
The stock market ended the week with a strong rebound, but the broader tone remains cautious. Concerns about Fed policy, inflation, and government funding will likely dominate next week’s shortened trading sessions. Investors should remain vigilant as year-end volatility continues.
Defensive positioning and selective buying opportunities remain prudent strategies.
Have a great weekend,
— Warren