Stock Market Analysis for December 23, 2024

As we head into the final trading week of December 2024, markets show mixed signals following a week of significant economic announcements and geopolitical developments. Here’s a detailed look at the current landscape and expectations moving forward.

Key Events Impacting the Market

• Federal Reserve Policy Update: Last week, the Federal Reserve maintained interest rates but signaled potential hikes in 2025 in response to ongoing inflation concerns, affecting market sentiment, specifically in tech stocks which are sensitive to rate changes.
• Geopolitical Tensions: Heightened tensions in Eastern Europe have raised concerns over energy supply disruptions, impacting sectors such as utilities and energy.
• Retail Sales Data: The recent retail sales data indicated stronger-than-expected holiday shopping figures, providing some relief for consumer-discretionary stocks.

Market Performance Last Week

• The S&P 500 closed the week at approximately 4,600, a slight increase from the previous week. Tech stocks rallied late in the week due to positive earnings from major players like Alphabet and Microsoft.
• Energy stocks, particularly those in oil and gas, faced volatility due to fluctuating oil prices driven by geopolitical factors.

Predictions for Next Week

Looking ahead, investors should monitor:

• Economic Indicators: December’s Consumer Confidence Index and Jobless Claims reports due later this week will be critical in gauging consumer sentiment and economic health.
• Earnings Reports: Companies like FedEx and Tesla are set to release their earnings. Positive surprises could bolster market confidence.

Recommendations

Buy:

• SPDR S&P 500 ETF Trust (SPY): Consider investing in SPY as it provides broad exposure to U.S. equities and remains a solid long-term vehicle amidst economic uncertainty.
• NVIDIA Corporation (NVDA): With the rise of AI applications and demand for GPUs, NVIDIA is expected to continue performing well in the upcoming year.

Sell:

• Energy Select Sector SPDR Fund (XLE): Given the current geopolitical tensions and potential for a decrease in oil prices, it may be prudent to take profits and reassess.

Conclusion

Entering this final week of 2024, the stock market remains a mixed bag as macroeconomic factors and corporate earnings weigh on investors’ minds. Keeping a close eye on upcoming economic indicators and company earnings will be key to navigating this phase of market uncertainty.