The Week That Was, The Week Ahead: Macro & Markets, December 15, 2024

Everything to Know about Macro and Markets

Stocks finished the week with mixed results, as the S&P 500 (SPX) declined by 0.64% and the Dow Jones Industrial Average (DJIA) tumbled by 1.82%, its worst performance since October. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) gained for the fourth consecutive week, rising by 0.34% and 0.73%, respectively.

Broadcom Lifts The Market

Last week’s tech benchmarks’ outperformance was largely a “one-man show,” as it was driven by Friday’s surge in shares of Broadcom (AVGO), whose outlook for booming AI chip demand lifted stocks across semiconductor and hardware industries.

Outside of the Hardware Storage & Peripherals, other S&P IT sector industries were in the red for the week. This occurred despite the strong support from significant rallies in Alphabet (GOOGL) and Tesla (TSLA) stocks. The Software industry seemed to suffer from investor rotation within the technology sector, as Broadcom’s upbeat forecast for its chip business prompted inflows into semiconductor-related stocks.

Moreover, according to Bespoke Investment Group analysis, there were more decliners than gainers in all trading sessions in December so far, the longest such streak since the early 2000s. Many analysts sounded their concern about the return of the large-cap tech’s narrow market leadership, which could dent the viability of the stock-market rally.

Still, the Federal Reserve’s widely expected rate cut this week could support the stocks well into 2025, taking into account the traditional Santa rally that should also help investor optimism. Analysts from leading Wall Street investment firms anticipate that the S&P 500 build on its 27% climb so far in 2024, with some targeting gains of over 40% by year-end. However, the rally is projected to lose some steam next year, with analysts expecting gains for 2025 of roughly 10%. Though this would place the S&P 500’s increase close its long-term yearly average of about 11%, it would still translate into a streak of three straight years of gains.

Stocks That Made the News

▣ Broadcom (AVGO) was by far the best-performing stock in the S&P 500, surging by over 26% over the week after it posted better-than-expected results and projected strong demand for its AI offerings. AVGO’s stock hit an all-time high, while its market cap crossed a $1 trillion mark, putting the company on track to join the members of the “Magnificent” pack.

▣ Broadcom’s optimistic outlook lifted shares of other chip producers, such as ARM Holdings (ARM) and Marvell (MRVL). However, the key chip stock – Nvidia (NVDA) finished the week with a loss on the back of some negative news. Chinese regulators launched an antimonopoly probe into the company, threatening to impact the roughly 15% of Nvidia’s revenue which arrives from the Chinese market. In addition, the U.S. Supreme Court dismissed NVDA’s appeal to toss shareholder lawsuit against the company. 

▣ Adobe (ADBE) sunk the most in two years despite strongly beating analyst revenue and earnings projections in its fiscal Q4 2024. The creative software company’s stock was pressured by an underwhelming fiscal 2025 guidance, which sparked worries that ADBE may lose some of its business to AI tools produced by OpenAI and other firms.

▣ Microsoft (MSFT) and Alphabet (GOOGLE) may be designated by the U.S. Department of Commerce to act as global gatekeepers for access to AI chips, according to a Reuters report. Under this arrangement, the tech leaders will comply with strict requirements, which include thorough reporting and restricting Chinese entities’ access to cutting-edge semis.

▣ Alphabet (GOOGL) unveiled its latest quantum computing chip, Willow, which can perform complex calculations in under five minutes—a task that would take the world’s fastest supercomputers an estimated 10 septillion years. Willow represents a breakthrough in quantum computing, positioning Google at the forefront of quantum computing and ahead of competitors. Google CEO Sundar Pichai highlighted Willow’s potential to revolutionize industries like drug discovery and energy.

▣ Arista Networks (ANET) climbed to an all-time high after a slate of Wall Street analysts upped their price targets on the stock, saying that the boom in AI infrastructure demand will benefit the cloud networking solutions provider. The company’s stock was also supported by a recent 4-for-1 stock split.  

▣ The Nasdaq announced on Friday that Palantir (PLTR), MicroStrategy (MSTR), and Axon Enterprise (AXON) will join the Nasdaq 100 Index on December 23^rd, replacing Super Micro Computer (SMCI), Moderna (MRNA), and Illumina (ILMN).

▣ Super Micro Computer (SMCI) shares tumbled by 25% over the week prior to the Nasdaq’s announcement. SMCI’s shares have regained some of their luster in the period between November 15^th and December 9^th, but now seem to be in a freefall once again. The loss of almost 70% from the stock’s high in March was sparked by accounting fraud allegations and reporting compliance problems. The company is reportedly seeking a capital infusion through a “private investment in public equity” (PIPE) scheme.  

Upcoming Earnings and Dividend Announcements

The Q3 2024 earnings season is almost over, but some newsworthy earnings releases are still scheduled for this week.

The most notable earnings releases this week are coming from Micron (MU), General Mills (GIS), Lennar (LEN), Nike (NKE), FedEx (FDX), Accenture (ACN), Darden Restaurants (DRI), and Carnival (CCL).

Ex-dividend dates are coming this week for Merck & Company (MRK), Iron Mountain (IRM), American International Group (AIG), Best Buy Co (BBY), VICI Properties (VICI), Hewlett Packard Enterprise (HPE), Omnicom Group (OMC), and other dividend-paying firms.

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