Market Recap - Mixed Week Over New Year's Holiday

The stock market had a mixed week, which included the final sessions in 2024 and final sessions of the Santa Claus Rally period.

The major indices lost steam at the end of the year after registering huge gains, but some rebound action kicked in at the end of the week. 

Small stocks outperformed their larger peers this week, leading the Russell 2000 to settle 1.1% higher. The S&P 500 and Nasdaq Composite each declined 0.5% for the week. The S&P surged 23.3% in 2024 and the Nasdaq Composite closed 28.6% higher for the year. 

This week's price action left the S&P 500 lower over the Santa Claus Rally period, which has been good for an average gain of 1.3% for the S&P 500 since 1950, according to The Stock Traders Almanac. It has been observed that significant downturns have occurred (but not always) in years when Santa didn't show. To that end, bear in mind that Santa didn't show last year and the S&P 500 went on to log a 23.3% price gain for 2024.

The S&P 500 also closed below its 50-day moving average, which pivoted from support to resistance on Monday. 

Only three S&P 500 sectors closed higher this week -- energy (+3.2%), real estate (+0.6%), and health care (+0.01%) -- while the materials (-2.1%), consumer discretionary (-1.5%), and consumer staples (-1.4%) sectors logged the largest declines. 

Volume was relatively light due to holiday-related closures this week. Several foreign markets were closed on Tuesday (or closed early) and remained closed Wednesday for the New Year's holiday. The U.S. markets were open for a full day on Tuesday and closed on Wednesday.

• Russell 2000: +1.1% for the week / +1.7% YTD

• Nasdaq Composite: -0.5% for the week / +1.6% YTD

• S&P 500: -0.5% for the week / +1.0% YTD

• S&P Midcap 400: +0.4% for the week / +1.0% YTD

• Dow Jones Industrial Average: -0.6% for the week / +0.4% YTD

Market Recap - Slim Gains Over a Short Week

The stock market logged some gains on this holiday-shortened week.

The equity market closed at 1:00 p.m. ET on Tuesday and remained closed on Wednesday for Christmas Day.

The "Santa Claus rally" period (i.e. the last five trading days of the year and the first two trading days of the new year) began on Tuesday and doesn't always lead to gains in the stock market, but usually features a positive skew. The S&P 500 closed 0.7% higher on the week, the Dow Jones Industrial Average settled 0.4% higher than last Friday, and the Nasdaq Composite was 0.8% higher this week.

There wasn't a lot of market‐moving news and volume was thin ahead of another abbreviated week. The equal‐weighted S&P 500 settled fractionally higher than last week.

Gains in some mega caps and chipmakers provided some support to the broader equity market. NVIDIA (NVDA) closed 1.7% higher, Tesla (TSLA) gained 2.5%, and Broadcom (AVGO) surged 9.5%.

Qualcomm (QCOM) was another winner from the semiconductor space after jurors found that the chip company didn't violate terms of its agreement covering Arm Holding's (ARM) designs. Shares settled 2.9% higher than last Friday.

Eli Lilly (LLY) was another story stock, closing 2.0% higher for the week, after the FDA approved Zepbound (tirzepatide) as the first and only prescription medicine for moderate-to-severe obstructive sleep apnea in adults with obesity.

The economic calendar was light, featuring a better‐than‐expected weekly jobless claims report. Weekly initial jobless claims for the week ending December 21 checked in at a lower than expected 219,000 (Briefing.com consensus 232,000) while continuing jobless claims for the week ending December 14 hit their highest (1.910 million) since November 13, 2021.

• Nasdaq Composite: +0.8% for the week / +31.4% YTD

• S&P 500: +0.7% for the week / +25.2% YTD

• Dow Jones Industrial Average: +0.4% for the week / +14.1% YTD

• S&P Midcap 400: +0.5% for the week / +12.8% YTD

• Russell 2000: +0.1% for the week / +10.7% YTD

Market Recap - Inflation Data, Earnings News, and Rising Rates Drive Selling Interest

The Nasdaq Composite closed above 20,000 for the first time this week, settling 0.3% higher than last week.

The S&P 500 and Dow Jones Industrial Average dropped 0.6% and 1.8%, respectively, this week. The Russell 2000 underperformed its peers, losing 2.6%.

There were festering valuation concerns in play that also mixed with chatter of the market being overbought on a short-term basis and due for some consolidation. Market participants used rising market rates as an excuse to engage in profit-taking activity.

The 10-year yield jumped 25 basis points to 4.40% and the 2-year yield jumped 14 basis points to 4.24%. This price action followed disappointing inflation readings and data indicating some softening in the labor market.

Wednesday's release of the November Consumer Price Index (CPI) report met expectations and reinforced the market's anticipation of an upcoming rate cut. Total CPI moved higher on a year-over-year basis to 2.7% from 2.6% and core CPI was at 3.3%, which is still above the Fed's 2% inflation target.

Thursday's release of the November Producer Price Index (PPI) report showed rising inflation at the producer level, which doesn't mix with the market's view of ongoing rate cuts. The index for final demand was up 3.0% year-over-year versus 2.6% in October. Excluding food and energy, the index for final demand was up 3.4% year-over-year (3.45% unrounded versus 3.37% in October).

Market participants also received weekly initial jobless claims, which increased to 242,000 from 225,000 and continuing claims, which increased to 1.886 million from 1.871 million.

Expectations for a 25-basis points rate cut at the FOMC meeting next week increased in response to the data. The fed funds futures market now sees a 95.3% probability of a 25 basis points cut next week, up from 86.0% one week ago, according to the CME FedWatch tool.

In corporate news, Oracle (ORCL) declined 9.6% this week after a disappointing fiscal Q2 earnings report, missing the consensus EPS estimate compiled by FactSet, and issuing lower-than-expected guidance for fiscal Q3. Adobe's (ADBE) FY25 guidance disappointed investors while shares of Broadcom (AVGO) rallied 25.2% this week after solid results and pleasing guidance.

In other news, the ECB's cut its key policy rates by 25 basis points, as expected.

• Nasdaq Composite: +0.3% for the week / +32.7% YTD

• S&P 500: -0.6% for the week / +26.9% YTD

• S&P Midcap 400: -1.6% for the week / +17.8% YTD

• Russell 2000: -2.6% for the week / +15.8% YTD

• Dow Jones Industrial Average: -1.8% for the week / +16.3% YTD

Market Recap- A Big Week For The Mega-Cap Stocks

It was a big week for the stock market.

We mean that figuratively more so than literally given that the mega-cap stocks dominated this week's trading action. Their influence was plain to see in the outperformance of the market cap-weighted S&P 500 (+1.0%) versus the equal‐weighted S&P 500 (-1.3%).

Led by the likes of Apple (AAPL), NVIDIA (NVDA), Microsoft (MSFT), Tesla (TSLA), Amazon.com (AMZN), and the usual cohort, the Vanguard Mega-Cap Growth ETF (MGK) surged 3.7% this week. It drew some energy from an AI trade that was ignited by Salesforce's (CRM) encouraging outlook for its Agentforce AI system for enterprises.

Separately, it was a momentous week for Bitcoin, which topped $100,000 for the first time ever on Thursday. The stock market took notice of that move (how could it not?) but, notably, it did not see an animal spirits trade in its wake. Stocks languished on Thursday, albeit after a run that saw the S&P 500 score 11 gains in 12 sessions and set several new record highs in the process.

The latter point notwithstanding, this was not a week accented with broad-based buying interest. The broader market took a backseat to the mega-cap trade and gave in to some consolidation activity.

There were only three S&P 500 sectors that finished higher this week. The upside for the market is that they carried a lot of weight and registered big gains. The consumer discretionary sector (+5.9%) led the charge followed by communication services (+4.1%), and information technology (+3.4%).

The other eight sectors had a tough go of it. The consumer staples sector, which declined 0.8%, lost the least amount of ground. Otherwise, losses ranged from 1.8% (financials) to 4.6% (energy).

Similarly, while the market cap-weighted S&P 500 gained 1.0% (rounding up), the Russell 2000 declined 1.1% and the S&P Midcap 400 Index fell 1.0%.

On a brighter note, the S&P 500 and Nasdaq Composite both finished the week at record closing highs, holding their bullish disposition after a November employment report that was neither too hot nor too cold. In effect, it was just right for the soft landing/no landing view that left the market hopeful about continued earnings growth and another rate cut at the December 17-18 FOMC meeting.

Treasuries also had another winning week. The 2-year note yield fell six basis points this week to 4.10% while the 10-year note yield dropped three basis points to 4.15%.

• Nasdaq Composite: +3.3% for the week / +32.3% YTD

• S&P 500: +1.0% for the week / +27.7% YTD

• S&P Midcap 400: ‐1.0% for the week / +19.8% YTD

• Russell 2000: ‐1.1% for the week / +18.8% YTD

• Dow Jones Industrial Average: ‐0.6% for the week / +18.4% YTD

Market Recap - Short Week, Solid Gains

The major indices closed higher across the board on this holiday-shortened week.

Markets were closed on Thursday for Thanksgiving and closed early on Friday (1:00 p.m. ET for the NYSE and 2:00 p.m. ET for the Treasury market).

The S&P 500, Dow Jones Industrial Average, Nasdaq Composite, and Russell 2000 all closed more than 1.0% higher compared to last week.

Lower Treasury yields, which followed the news of Scott Bessent being nominated for Treasury Secretary, were a breath of fresh air for a stock market contending with stretched valuations.

Mr. Trump's pick to lead the Department of the Treasury is perceived as "market-friendly" due to his background as a hedge fund manager. According to The Wall Street Journal, Bessent has expressed his priority to advance the Trump administration tax-cut proposals.

The bond market rallied due to optimism that Mr. Bessent, while focusing on tax cuts, will also focus on reducing the national debt, cutting the budget deficit to 3% of GDP, and advocating for a more gradual approach to tariffs in order to prevent runaway inflation.

The 10-yr note yield, which flirted with 4.50% last week, dipped below 4.20% on Friday. The 2-yr note yield also dipped below 4.20% after pushing 4.40% last week.

Market participants brushed off fears about potential reaccelerating inflation that stemmed from President‐elect Trump's announcement that he plans to impose tariffs—an additional 10% on imports from China and 25% on goods from Mexico and Canada—on his first day in office, contingent upon halting migrant flows and the trafficking of fentanyl into the U.S.

Also, PCE price inflation that was a bit sticky in October above the Fed's 2.0% target and real disposable personal income increased 0.4%. Other data included weekly initial jobless claims that were encouraging with a low reading of just 213,000, and pending home sales jumped 2.0% in October.

There was also a sharp 17.3% month-over-month decline in new home sales for October and a notable drop in the November Consumer Confidence Report, which showed a 12-month inflation expectations reading of 4.9% — the lowest since March 2020 (though still elevated, it signals a trend in the right direction).

• Nasdaq Composite: +1.1% for the week / +28.0% YTD

• S&P 500: +1.1% for the week / +26.5% YTD

• S&P Midcap 400: +0.7% for the week / +21.0% YTD

• Russell 2000: +1.2% for the week / +20.1% YTD

• Dow Jones Industrial Average: +1.4% for the week / +19.2% YTD

Market Recap - Back on a Winning Track After Post-Election Consolidation

The stock market returned to its winning ways this week after taking a breather last week as investors digested post-election gains.

Buy-the-dip trading contributed to the upside bias following some consolidation. The small cap Russell 2000 and S&P Mid Cap 400 benefitted from a capital rotation this week, gaining 4.5% and 4.2%, respectively.

The S&P 500 and Nasdaq Composite each moved 1.7% higher and the Dow Jones Industrial Average settled 2.0% higher.

Losses in some mega cap names, specifically Alphabet (GOOG), limited index performance. Shares dropped 4.2% since last Friday after news that the DOJ is pushing for a forced sale of Chrome and potentially Android. Subsequent reports indicated that Microsoft‐backed and ChatGPT owner OpenAI is considering developing its own browser, which would represent a viable competitive threat that provides GOOG with some firepower in its antitrust case.

Target (TGT) was another notable loser this week, dropping 17.8% since last Friday (and 20% during Wednesday's session) after its disappointing earnings report and outlook. Fellow retailer, and Dow component, Walmart (WMT) jumped 7.4% on the week following its earnings report.

The headliner on the earnings calendar was NVIDIA (NVDA), which settled flat on the week. NVDA's Q3 report garnered mixed responses due to a slight deceleration in its revenue growth rate. The report was solid overall, though, and the company said demand for its Blackwell chip is "staggering."

Other story stocks included crypto-related names, which were reacting to price action in Bitcoin. The cryptocurrency reached a new high of $99,768 on Friday.

Early in the week, geopolitical angst was piqued after reports that President Putin had lowered Russia's threshold for using nuclear weapons, that Ukraine had launched U.S.-made and UK-made missiles into Russia, and that Russian Foreign Minister Lavrov had called the attack on Russia an "escalation signal."

Treasuries settled mixed after this week's slate of economic reports. The 10-yr yield dropped two basis points to 4.41% and the 2-yr yield jumped seven basis points to 4.37%.

The lineup this week included a stronger-than-expected Existing Home Sales report for October, another decrease in weekly jobless claims, a U.S. S&P Global Services PMI for November that showed an acceleration in services sector activity, and a Manufacturing PMI that remained in contraction in November, but at a slower pace than what was seen in October. The final reading of the University of Michigan's Consumer Sentiment for November showed a dip to 71.8 from 73.0 in the preliminary reading, but it was still above October's final reading of 70.5 .

• Nasdaq Composite: +1.7% for the week / +26.6% YTD

• S&P 500: +1.7% for the week / +25.2% YTD

• S&P Midcap 400: +4.2% for the week / +20.1% YTD

• Russell 2000: +4.5% for the week / +18.7% YTD

• Dow Jones Industrial Average: +2.0% for the week / +17.5% YTD

Market Recap -Stocks Slide After Huge Post-election Run

The stock market followed last week's surge with some consolidation activity.

The S&P 500 hit another record high on Monday, and closed above 6,000 for the first time, but settled 2.1% lower this week. The index is still 1.5% higher since the election results.

Selling favored chipmakers and mega caps, but losses were broad based. The equal‐weighted S&P 500 closed 1.7% lower than last Friday. Only two S&P 500 sectors closed higher this week while eight sectors logged losses ranging from 1.1% to 5.5%.

The energy (+0.6%) and financial (+1.4%) sectors were the lone standouts in positive territory while the health care sector (‐5.5%) registered the largest loss, followed by the information technology sector (-3.2%).

Health care related stocks struggled through the week, but exhibited noticeable weakness on Friday after the news that President‐elect Trump nominated Robert F. Kennedy, Jr., known as a vaccine skeptic, to lead the Department of Health and Human Services.

Chipmakers were also struggling through the week, and also exhibited noticeable weakness on Friday after fiscal Q1 guidance from Applied Materials (AMAT), a leading chip equipment maker, failed to meet the market's more optimistic expectations.

The overall negative bias this week wasn't extreme compared to last week's surge, and stemmed from concerns over interest rates and speculation that the Fed may be more cautious with rate cuts than the market previously hoped. The 10-yr yield, which briefly reached 4.50%, settled 12 basis points higher than last Friday at 4.43%. The 2‐yr yield settled five basis points higher than last Friday at 4.30%.

This price action was related in part to remarks by Fed Chair Powell indicating that the "economy is not sending any signals that we need to be in a hurry to lower rates." This week's data largely corroborated Mr. Powell's comments.

Total CPI was up 2.6% year-over-year, versus 2.4% in September, and core CPI up 3.3% year-over-year, unchanged from September. Total PPI was up 2.4% year-over-year, versus 1.9% in September, and the index for final demand, less food and energy, was up 3.1% year-over-year, versus 3.0% in September.

Weekly jobless claims remained below recession-like levels, reflecting ongoing strength in the labor market that may translate to higher consumer spending,  piling more pressure on inflation. Retail sales were solid in October and the data was stronger than headline numbers suggest due to upward revisions in the September data.

• Nasdaq Composite: -3.2% for the week / +24.4% YTD

• S&P 500: -2.1% for the week / +23.1% YTD

• S&P Midcap 400: -2.7% for the week / +15.3% YTD

• Russell 2000: -4.0% for the week / +13.7% YTD

• Dow Jones Industrial Average: -1.2% for the week / +15.3% YTD

Market Recap - Stocks Surge to All-time Highs After Election Results

Stocks soared on this busy week that featured the release of a big batch of quarterly results, another rate cut from the FOMC, and the outcome of congressional and presidential elections.

The day after the election, the Dow Jones Industrial Average gained more than 1,500 points, the Russell 2000 soared 5.8%, the Nasdaq Composite surged 3.0%, and the S&P 500, with a 2.5% gain, logged its best post‐election performance ever!

There was the relief factor, with participants enthused that this won't be a contested election, and there was the growth factor, with participants thinking president‐elect Trump's aim to lower tax rates and decrease regulations will foster economic growth that remains above potential.

That view of policy matters manifested itself in a variety of ways:

• Small-cap stocks soared

• Financial stocks soared

• The U.S. dollar surged against other major currencies

• Bitcoin prices moved noticeably higher

• Cyclical sectors outperformed

There were a lot of "big winners" this week. Tesla (TSLA) was among them, capitalizing handsomely on the idea that Elon Musk's strong support of Donald Trump will be an added boon for the company. Shares settled 29.0% higher than last Friday.

Thursday's FOMC policy announcement didn't deter the market rally. The unanimous FOMC vote to cut the target range for the fed funds rate by 25 basis points to 4.50‐4.75% was largely expected.

The response in equities wasn't related so much to anything the Fed Chair said about policy, but rather more about what he didn't say - or imply. Specifically, he didn't implicitly remove the possibility of another rate cut at the December FOMC meeting. Mr. Powell reiterated, as we thought he might, that policy is not on a preset course and that decisions will be made on a meeting-by-meeting basis.

The Fed chair seemed to be marveling at the strength of the economy and the Fed's policy settings, both of which he thinks are in a very good place. He deferred answering questions about how president‐elect Trump's policy proposals might affect the Fed's decision‐making, noting simply the Fed can't really model for them because it doesn't know any of the specifics yet.

As an aside, he sounded terse indicating he wouldn't resign his position if president‐elect Trump asked him to, and said simply that the president firing or demoting him is not permitted under the law.

In other news, NVIDIA (NVDA) and Sherwin-Williams (SHW) replaced Intel (INTC) and Dow Inc. (DOW) in the Dow Jones Industrial Average starting on Friday, November 8.

• Nasdaq Composite: +5.7% for the week / +28.5% YTD

• S&P 500: +4.7% for the week / +25.7% YTD

• S&P Midcap 400: +6.3% for the week / +18.5% YTD

• Russell 2000: +8.6% for the week / +18.4% YTD

• Dow Jones Industrial Average: +4.6% for the week / +16.7% YTD

Market Recap - Busy week of earnings and economic data ends mostly lower

This was a huge week in terms of earnings and economic news and the major indices closed mostly lower.

The S&P 500 declined 1.4%, the Nasdaq Composite declined 1.5%, and the Dow Jones Industrial Average settled 0.2% lower. The Russell 2000 eked out a 0.1% gain on the week.

Mega cap names that reported earnings garnered mixed responses from investors. Alphabet (GOOG) and Amazon.com (AMZN) closed 3.4% and 5.4% higher, respectively, on the week after their quarterly reports. Apple (AAPL), Meta Platforms (META), and Microsoft (MSFT) closed with losses ranging from 1.1% to 4.2% following their earnings reports.

Chipmakers showed weakness through the week. Advanced Micro Devices (AMD) was an influential loser, dropping 9.2% after reporting earnings and soft Q4 revenue guidance. The PHLX Semiconductor Index (SOX) settled 4.1% lower than last Friday.

In terms of economic news, market participants were digesting:

• Initial jobless claims that were a low 216,000, the Q3 Employment Cost Index that was up 0.8%, personal income that was up 0.3% month-over-month in September, personal spending that increased 0.5%, and the core-PCE Price Index was stuck at 2.7% year-over-year for the third straight month.

• Private-sector payrolls, which increased by 233,000 in October (Briefing.com consensus), according to ADP, real GDP, which increased at an annual rate of 2.8% in the third quarter (Briefing.com consensus 3.0%), bolstered by a 3.7% increase in consumer spending, and pending home sales that jumped 7.4% in September (Briefing.com consensus 2.5%).

• Nonfarm payrolls that increased by just 12,000 (Briefing.com consensus 120,000) while nonfarm private payrolls decreased by 28,000 (Briefing.com consensus 105,000). This news was followed by a report of tepid construction activity in September and a dip in the October ISM Manufacturing PMI to 46.5% (Briefing.com consensus 47.6%) -- the lowest reading in 2024 -- from 47.2% in the previous month.

• The jobs data were depressed by the Boeing strike and likely by the effects of Hurricanes Helene and Milton, yet with forecasts suggesting those influences could lop off something on the order of 100,000 positions, the view to October, coupled with sizable downward revisions to the August and September payroll figures, connote softness in hiring activity.

Treasury yields settled sharply higher this week. The 10 - yr yield jumped 13 basis points to 4.36% and the 2-yr yield settled ten basis points higher at 4.20%.

• Nasdaq Composite: -1.5% for the week / +21.5% YTD

• S&P 500: -1.4% for the week / +20.1% YTD

• Dow Jones Industrial Average: -0.2% for the week / +11.6% YTD

• S&P Midcap 400: -0.2% for the week / +11.6% YTD

• Russell 2000: +0.1% for the week / +9.0% YTD

Market Recap- S&P 500 breaks six-week winning streak

The stock market faced some selling pressure after six straight weeks of gains for the S&P 500.

Last Friday's close had the S&P 500 and Dow Jones Industrial Average at record highs, so normal consolidation was part of the story this week.

The S&P 500 closed 1.0% lower this week and the Dow Jones Industrial Average sank 2.7%. The profit-taking activity was fueled by rising market rates. The 10-yr yield settled 16 basis points higher this week at 4.23% and the 2-yr yield settled 15 basis points higher this week at 4.10%. This week's selling in the Treasury market expanded the 2s10s spread by a basis points to 13 bps.

The Nasdaq Composite managed to settle 0.2% higher for the week, benefitting from buying activity in mega caps and semiconductor shares.

Some of the buying in mega cap shares was related to the huge jump in Tesla (TSLA) following impressive Q3 earnings and 2025 vehicle growth forecast.

Other names that reported earnings included blue chip companies like Verizon (VZ), 3M (MMM), GE Aerospace (GE), Lockheed Martin (LMT), General Motors (GM), IBM (IBM), and Honeywell (HON).

• Nasdaq Composite: +0.2% for the week / +23.4% YTD

• S&P 500: -1.0% for the week / +21.8% YTD

• Dow Jones Industrial Average: -2.7% for the week / +11.7% YTD

• S&P Midcap 400: -2.8% for the week / +11.7% YTD

• Russell 2000: -3.0% for the week / +8.9% YTD