The Week That Was, The Week Ahead: Macro & Markets, December 1, 2024

Everything to Know about Macro and Markets

Stocks closed sharply higher during the shortened trading session on Friday, clocking their best post-Thanksgiving Friday session in over a decade. Friday’s rally propelled stocks to notable weekly gains, with the S&P 500 (SPX) and the Dow Jones Industrial Average (DJIA) reaching new records. The two indexes gained 1.41% and 2.37%, respectively. The tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) lagged behind their peer indexes, though still notching gains of 1.3% and 0.9% for the week, respectively.

New Week, New Record

The S&P 500’s 5.7% gain in November was propped up by record monthly investor inflows into the U.S. stocks, which attracted $141 billion. The broad large-cap index has risen by 25.8% year-to-date, on track to one of its best annual performances since 2000. The SPX has achieved 52 new highs this year; even if it doesn’t reach another record until year-end, that would still be its seventh-best run since 1929.

All S&P 500’s sectors are flashing bright green year-to-date. However, there has been a change in the market leadership after the former rally driver – the Technology sector – lagged in the past few months, sliding to the third place in the performance table after Financials and Communication Services.

The stock rally of 2023 and the first half of 2024 was largely driven by a small number of tech mega-caps. Their enormous capitalizations translated into an outsized impact on SPX, NDX, and Nasdaq indexes. Meanwhile, the DJIA lagged over that period due to the blue-chip index’s low exposure to technology. However, market leadership has broadened beyond this narrow set of stocks in recent months, staging a far healthier backdrop for the bull market’s momentum to continue.

Politics, Meet Economy

All four major indexes capped their best month in a year, as investors found reassurance in Trump’s pick for his Treasury secretary position. The President-elect chose Scott Bessent, a seasoned hedge fund executive with deep knowledge of global financial systems and currency markets. Investors assumed that Bessent, with his expertise and measured approach, will prioritize economic and market stability. Mr. Bessent has also received a mark of approval from JPMorgan’s CEO Jamie Dimon, who said that he is “a fiscal hawk” and supported the nomination as “positive overall for the economy and the markets.”

The Treasury secretary pick took some heat off the tariff worries, which have weighed on investor sentiment, specifically in light of their effect on inflation. The Fed’s preferred inflation measure, Core PCE, came in at 2.8% annualized pace for October. Although in line with expectations, the figure remained stubbornly above the central bank’s 2% target.

Last week, investors also received confirmation of the economy’s continued robust health, as the revised Q3 GDP growth (annualized) was 2.8%, in line with economists’ projections. A strong economy and still-high inflation raised questions among investors as to whether to expect another rate cut this year. These doubts were supported by another batch of additional data, including a decline in weekly unemployment claims.

However, the Fed’s November Minutes showed the rate committee members were confident that inflation was heading toward their 2% annual target and expected to continue to lower interest rates gradually over time. This week’s release of jobs data may add some clarity to the extent that policymakers will need to support the labor market by relaxing their monetary policy.    

Stocks That Made the News

▣ Tesla (TSLA) capped one of the best months in its history, rising by over 38%, as CEO Elon Musk’s bet on Trump turned into a massive boon for the company’s shares.

▣ Chip and semiconductor equipment producers rose on Friday, paring most of their previous weekly losses, after Bloomberg reported that the Biden administration is considering updated restrictions on chip-related exports to China that would be less stringent than previously proposed. Lam Research (LRCX) and KLA Corp. (KLAC) and Applied Materials (AMAT) registered strong gains, although the latter’s Friday rally wasn’t enough to take it to the green territory for the week.   

▣ Nvidia (NVDA) finished the week deep in the red despite its Friday’s jump due to post-earnings profit-taking earlier in the week. Still, the AI leader is up by 187% year-to-date.

▣ Other “Magnificent” cohort members finished the week with strong gains, with Amazon (AMZN) leading the pack after several analyst price-target upgrades.    

▣ Super Micro Computer (SMCI) was Friday’s worst performer amongst the S&P 500 peers, though it still managed to end the week with hefty gains. The server and data storage provider continues its wild ride amid the ongoing threat of delisting from the Nasdaq. Although the company hired a new auditor and submitted a plan to address delays in its financial reporting, the statements revision may take some time, with no clarity on a timeline for releasing its overdue annual report.      

Upcoming Earnings and Dividend Announcements

The Q3 2024 earnings season is winding down, but many newsworthy earnings releases are still scheduled for this week.

The most notable earnings releases this week are coming from Salesforce (CRM), Marvell (MRVL), Okta (OKTA), Zscaler (ZS), Pure Storage (PSTG), Chewy (CHWY), Synopsys (SNPS), DocuSign (DOCU), Lululemon Athletica (LULU), and Ulta Beauty (ULTA).

Ex-dividend dates are coming this week for Nike (NKE), Realty Income (O), McDonald’s (MCD), Lockheed Martin (LMT), Schlumberger (SLB), Qualcomm (QCOM), BlackRock (BLK), PepsiCo (PEP), Bank of America (BAC), and other dividend-paying firms.       

For additional exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.