The rally stalled this week after previous session highs. Will the seasonal rally pick up or should we correct our outlook?
Monday S&P 500 -0.61% | NASDAQ -0.62%
Trading fell from fresh highs to begin the week. Added focus on inflation data this week was likely responsible for the pullback. 2-year and 10-year Treasury Yields both rose but remain in a normal curve (meaning the 10-year yield is higher than the 2-year yield).
Tuesday S&P 500 -0.30% | NASDAQ -0.25%
The early-week slide continued as the recent rally lost momentum seen over the last 3 weeks. Major benchmarks were all dealt a blow on the day as Treasury yields moved higher.
Wednesday S&P 500 0.82% | NASDAQ 1.77%
Markets recovered most losses on the day and the tech-heavy NASDAQ surpassed the 20,000 milestone for the first time as tech stocks continued to jostle for position. The big news on the day was CPI data, with the Core CPI figures (excludes volatile food and energy categories) coming in flat for November. Markets are pricing in a .25% rate cut after the Federal Reserve meets on December 17th and 18th and stalling inflation data shouldn’t inhibit an additional cut before year-end.
Thursday S&P 500 -0.54% | NASDAQ -0.66%
Continuing and Jobless claims rose higher and markets took note. Major indexes fell through the close on additional data related to producer prices rising in November. Increases in producer prices often foreshadow a rise on consumer prices.
Friday S&P 500 0.00% | NASDAQ 0.12%
The week concluded with very little movement on Friday as data was digested from the CPI reports. Profit pulling could be a contributing factor after the recent trading highs ahead of the announcement of the next rate cut decision.
Conclusion S&P 500 -0.64% | NASDAQ 0.34%
After 3 solid weeks of gains, markets were mixed for the week as we cross into mid-month. The S&P500 fell slightly over the week but wasn’t without some turbulence. The index is up almost 27% YTD while the NASADAQ closed higher for the week ending up almost 33% YTD. With such strong growth, the question is whether the growth is sustainable going into 2025. Markets have enjoyed meaningful growth for 2 years since the low in October 2022. A correction, which is defined as a market decline of 10% or more from a previous peak, may be on the horizon but several factors point towards moderate growth in 2025. Corrections can be a good thing! They allow for the opportunity to rebalance from riskier assets as well as the opportunity to buy assets at cheaper purchase prices. One indicator has been the growth of the U.S. Economy YTD as well as the forecast for the 4th Quarter. The Atlanta Fed GDPNow is targeting a 3.3% Q4 increase (up from the 3rd quarter reading of 2.8%). A large percentage of the growth of the economy is attributable to the services industry which has shown little signs of stalling; however, goods prices will be top-of-mind in the months and quarters ahead. The framework for near-term growth is in place with the potential headwind being the pace of future rate cuts and slower production in the new year. The chances of markets finishing on a “Santa Claus Rally” for the balance of the year is still in play but this time of year is often an opportunity to give to other areas of the market and pare down highly appreciated asset classes in favor of others. As always, investors risk tolerance and goals are priority in the decision-making process for individual portfolios.
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