The week was a tale of two halves. The first half was cautious and the second half was fruitful, which will win out?
Monday
S&P 500 0.16% | NASDAQ 0.59%
Markets opened the week on a sour note. The move lower from equity markets was mainly led by AI and tech stocks. This sustained a recent trend of caution and rotation out of many large technology names. The economic data being released throughout the week also carried substantial meaning for equity markets. As a result, trade showed more caution than normal, with a flight to defensives.
Tuesday
S&P 500 0.24% | NASDAQ 0.23%
Unemployment data for the month of November came in Tuesday morning. It showed that while more jobs were added than expected the unemployment rate also went up more than expected. It came in at 4.6%, excluding the pandemic, this is the highest level since March of 2017. While 4.6% is not ideal, it did partially come from a higher participation rate. This is typically a sign of optimism from job seekers in the opportunities that are available.
Wednesday
S&P 500 1.16% | NASDAQ 1.81%
Wednesday was decisively negative as tech stocks sold on news of a data center deal struggling to get done. The implications were sent across the sector like a shockwave. It indicated a distrust from investors in the viability of the size of recent deals.
Thursday
S&P 500 0.79% | NASDAQ 1.38%
Inflation saved the week! Whoever thought I would write those words!!! The Consumer Price Index for November reported modest gains for inflation, moving up YoY at 2.7% through November. It was expected to increase 3.1%! With inflation, good news is good news and with Jobs, bad news is good news. All this relates to the Federal Reserve Bank (FRB). A rate cut is more likely when inflation proves more mild in the face of weak jobs data. Even with this, the CME Fed Watch projection is for the first rate cut of 2026 to occur in June…
Friday
S&P 500 0.88% | NASDAQ 1.31%
The week closed on a strong note, specifically for the recently ailing tech and AI sectors. There was little data to support it. A strong forward guidance report and the known of lower current rates easing the difficulty of entry for data centers. It feels as if the Santa Claus Rally may have commenced rather than a true rally in tech.
Conclusion
S&P 500 0.10% | NASDAQ 0.48%
For all the caution in the first few days of the week, the back half closed out strongly. Strong enough to generate a positive week of performance for equity markets. This recent strength will likely play out the remainder of December as we move into the Santa Claus rally. Past that, equities from a timeline are due for a correction in the first quarter. However, recent volatility may forestall that move as valuations remain more reasonable…
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