The Week That Was, The Week Ahead: Macro & Markets, December 8, 2024

Everything to Know about Macro and Markets

Stocks finished the week with mixed results, as the Dow Jones Industrial Average (DJIA) declined by 0.6% while the three other main benchmarks set new records. The S&P 500 (SPX) rose for the third straight week, adding 0.96% and sailing past most of Wall Street’s year-end targets. With 57 records this year, the broad large-cap index is on track path for its best annual return since 2019. Meanwhile, the tech benchmarks Nasdaq Composite (NDAQ) and Nasdaq-100 (NDX) regained market leadership with weekly surges of 3.34% and 3.31%, respectively.

Robust Economy Supports the Rally

As we head into the year-end holiday season, investors have many reasons to celebrate – not only multiple records made so far this year – but also the optimistic outlook for stocks going forward. Earnings performances at the top tiers of the market caps have been mostly stronger than expected, supporting the broader market. An additional testament to the robustness of the U.S. economy last week was also met with market cheer.

Data continues to point to a resilient economy and labor market, reflecting a robust backdrop for stock markets going forward. Consumption – the backbone of the U.S. economy, driving about 70% of GDP – is robust, with healthy rates of spending growth supported by positive trends in real wage gains. The consumer sentiment index touched its highest level since April, reflecting positive economic expectations among U.S. households. As inflation is expected to continue trending down, while borrowing costs are set to keep on declining thanks to the Fed’s monetary easing, consumer strength is slated to continue well into 2025.     

Moreover, U.S. economic growth for 2024 is forecast to come in at a healthy clip of about 3%, while the unemployment rate remains far below its long-term average. Last Friday’s jobs report confirmed the strength of the labor market, as hiring growth strongly rebounded from October’s weakness. Although the unemployment rate ticked slightly higher last month, it remains comfortably low.

Still, the increase in unemployment to 4.2% (from 4.1% last month) was seen as a sign of a moderation in labor market strength, supporting expectations for another interest-rate cut by the Federal Reserve later this month. However, there’s still one test for the economy to clear on the way to further easing – this week’s CPI inflation report. If the inflation comes in unchanged from last month’s 3.3% annualized rate as economists expect, markets may surge once again.     

Stocks That Made the News

▣ Workday (WDAY) and Apollo Global Management (APO) rose on the news that their stocks will join the S&P 500 on December 23^rd.

▣ Lululemon (LULU) surged by over 20% for the week after posting impressive Q3 results and sharing an optimistic outlook for revenue growth in the ongoing quarter.

▣ Another Consumer Discretionary winner was Ulta Beauty (ULTA), whose strong Q3 performance and reaffirmed Q4 outlook. This led to a jump of over 10% for the week.

▣ Salesforce (CRM) continued its post-earnings gains, adding almost 9% for the week after the company exceeded analyst expectations on strong demand for its AI-driven solutions and lifted revenue forecast for the full fiscal year.

▣ Hewlett Packard Enterprise (HPE) jumped by over 13% after the company exceeded top- and bottom-line forecasts on record revenue, highlighting AI server demand as the growth driver.

▣ Intel (INTC) tumbled by over 15% last week, bringing this year’s loss to nearly 60%, as uncertainty about the chipmaker’s future rose with the dismissal of CEO Pat Gelsinger.

▣ UnitedHealth (UNH) dropped by almost 10% following the tragic news of the murder of Brian Thompson, the CEO of the group’s insurance unit, which brought in a sudden leadership vacuum, leading to investor uncertainty.

Upcoming Earnings and Dividend Announcements

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

The most notable earnings releases this week are coming from Oracle (ORCL), MongoDB (MDB), GameStop (GME), AutoZone (AZO), Adobe (ADBE), Broadcom (AVGO), and Costco (COST).

Ex-dividend dates are coming this week for FedEx (FDX), UnitedHealth (UNH), Occidental Petroleum (OXY), Travelers Companies (TRV), Texas Roadhouse (TXRH), Lam Research (LRCX), Taiwan Semiconductor Manufacturing (TSM), Dick’s Sporting Goods (DKS), Walmart (WMT), and other dividend-paying firms.       

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