Weekly Market Mornings (December 29) S&P 500 Dip Below 6K, but Ended Winning (Last Week of 2024)

Last Week’s Reports

Economic Reports

New orders for manufactured durable goods in the US fell by 1.1% to $285.1 billion in November, after a revised 0.8% rise in October. This decrease was much larger than the expected 0.4%.

Building permits in the US increased by 5.2% to an annual rate of 1.493 million in November. This was a slight revision from the initial estimate, reaching the highest level since February 2024. Also, new home sales in the US rose by 5.9% in November, after a sharp decline of 14.8% in October.

Initial jobless claims in the US dropped to 219,000 in the second week of December, which was better than the expected. This is indicating a still-tight labor market as the year ends, aligning with the FOMC’s recent concern about inflation.

Also, continued jobless claims increased to 1.91 million in the week ending December 14, the highest in over three years. This suggests it is taking longer for unemployed individuals to find jobs.

Meanwhile, the 4-week average of jobless claims increased to 226,500 in the week ending December 21, up from 225,500 the previous week.

Indices

Indices’ Weekly Performance:

US stocks fell on Friday due to a selloff in major tech companies, ending a year full of ups and downs but overall great.

Despite Friday’s losses, the S&P 500, Dow and Nasdaq gained for the week, thanks to the S&P 500’s best Christmas Eve performance since 1974.

Traders are now looking ahead to 2025, focusing on the Federal Reserve’s interest rate plans and the possible impact of Donald Trump returning to the White House.

Markets have processed this year’s important data and now expect potential rate cuts as the Fed tries to manage inflation and a slowing job market.

Investor optimism is high as we enter 2025. Positive trends from 2024 have been reinforced by the November presidential election, raising hopes for pro-growth policies. This creates a favorable environment for higher stock prices if the US economy grows above 2% and corporate earnings rise above 10%.

However, Saxo Bank warned that the usual ‘Santa Claus’ rally in the stock market might end early next year due to potential new trade policies or tariffs from the incoming Trump administration. The ‘Santa Claus’ rally typically happens during the last week of December and the first two trading days of January.

Stocks

Sector’s Weekly Performance:

Source: Finviz

Top Gainers: Technology and energy sectors rose over 2% each.

Losers: Consumer defensive saw losses.

• Technology: Sector up 2.2%, driven by Broadcom (+9.5%) and Nvidia (+4.9%).
• Energy: Up 2.1%, boosted by oil price rise.
• Financials: Sector up 2%; banks sued the Federal Reserve over stress tests.
• Health Care: FDA proposed new rules for detecting asbestos in talc-based cosmetics.
• Consumer Defensive: Declined, with Walmart down; faced lawsuits over payment methods for delivery drivers.

Stock Market Weekly Performance:

Source: Finviz

Top Gainers in the S&P 500

• Broadcom (AVGO): Rose 10% after AI revenue soaring 220% to $12.2 billion, largely thanks to hyperscale clients like Google, Meta, and ByteDance.
• General Motors (GM): Climbed 7.8% fueled by positive news about a substantial change in a company’s business prospects usually make its stock ‘trending’ and lead to an immediate price change
• Intel (INTC): Rose 6.5% supported by renewed investor confidence in its turnaround plan.
• Palantir (PLTR): Surged by 6.5% as the company focuses on deploying AI models in production amid the commoditization of cognition due to the rapid advancements in AI models.
• Advanced Micro Devices (AMD): Increased by 5.3% as investors see that tech enthusiasts are buzzing around AMD’s rumored launching of its new CPUs and GPUs early next year, which is only several days away.

Commodity

Weekly Performance of Gold, Silver, WTI and Brent Oil:

Source: Finviz

Gold prices traded around $2,630. Despite a tumultuous year, gold is seeing some stability as inflation and geopolitical tensions are largely factored into current prices. 

The 200-day moving average, which tracks the average price over the past 200 days, is at $2,480, indicating a strong bullish trend. The 100-day moving average is at the current market price, showing that buyers and sellers are undecided about the next move. If prices break above this level, they could reach the 50-day moving average, which is at $2,670 per ounce.

Forex

Weekly Performance of Major Foreign Exchange Pairs:

EURUSD exchange rate dropped to $1.04. The euro is ending 2024 with a 5.7% loss and no signs of growth expected for next year. The eurozone’s economy is struggling, with only 0.4% GDP growth in the third quarter compared to the US’s 2.8%.

The European Central Bank plans to cut interest rates at least twice in early 2025 to boost the economy, but further cuts might be necessary. Meanwhile, the US Federal Reserve aims for only two cuts in 2025, strengthening the US dollar.

Some Bank of Japan policymakers think it’s time for a rate hike, possibly in January. The BOJ kept rates at 0.25% this month to study more data on wages and the new U.S. administration’s economic policies. Starting January, the BOJ will reduce its monthly bond purchases by 410 billion yen, totaling about 4.5 trillion yen per month.

The Japanese yen has weakened recently as the U.S. Treasury yields rise, despite the Federal Reserve’s 100 basis points rate cut since September. Traders expect fewer rate cuts in the U.S. next year due to high inflation. Some believe the new Trump administration’s policies will boost growth and inflation, making traders cautious about betting against the U.S. dollar.

Crypto

Crypto Market Weekly Performance:

Source: quantifycrypto

Overall, lower trading volumes kept prices stable, affecting the crypto market as well. Bitcoin prices dipped below $96,000 early Friday. The cryptocurrency is down about 12% from its all-time high of $108,000 reached earlier this month. With no major news expected, investors have some time to relax and plan their next steps.

Next Week’s Outlook

Economic Events

Next week’s economic calendar includes data on US manufacturing for December from the Institute for Supply Management and S&P Global. We’ll also see reports on pending home sales for November and house prices for October. Markets will be closed on Wednesday for New Year’s Day.