Market Analysis for October 3, 2024

Summary of the Previous Week

Last week, the stock market showed a mix of volatility attributed to ongoing geopolitical tensions and economic data releases. The S&P 500 ended the week marginally lower, down approximately 0.5%, while the Nasdaq Composite dropped by 1%. Major movements were influenced by the Federal Reserve’s comments regarding interest rates and inflation.

Key Events that Impacted the Market

1. Federal Reserve’s Meeting: The Fed signaled a cautious approach for future rate hikes following recent economic data indicating slight easing in inflation. While markets interpreted this as a sign of stability, it raised concerns about economic growth sustainability.
2. Geopolitical Tensions: Tensions in Eastern Europe and developments in the Middle East prompted investors to seek safer assets, influencing sectors such as energy and utilities positively, while tech stocks faced selling pressure.
3. Employment Data: Friday’s employment report showed a stronger-than-expected increase in jobs, and with unemployment remaining low, markets reacted, especially in sectors sensitive to economic cycles.

Look Ahead: Events to Watch for Next Week

1. Earnings Reports: Key earnings reports are scheduled for major players like Alphabet (GOOGL) and Microsoft (MSFT). Investors should closely monitor these as tech stocks have been under pressure.
2. Inflation Reports: The Consumer Price Index (CPI) data is set to be released on Wednesday, October 9, which will be crucial in shaping market expectations around interest rates.
3. Geopolitical Developments: Ongoing global tensions could shift market sentiment rapidly, making defense and energy stocks ones to watch.

Recommendations for the Upcoming Week

• Buy: Consider adding to positions in ETFs like the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ), as long-term prospects remain solid despite short-term volatility.
• Individual Stock Picks:
• NVIDIA (NVDA): Favorable long-term outlook with ongoing demand for chips in AI and data centers.
• Exxon Mobil (XOM): Positioned strongly in the energy sector given current geopolitical risks and rising crude prices.
• Sell: If you hold any position in growth stocks that have been significantly declining, review your portfolio as continued pressure might lead to further losses.

Conclusion

Overall, the market appears to be in a wait-and-see mode, navigating through economic signals and global events. Keeping a balanced and diversified portfolio with a focus on ETFs and strong individual stocks will be beneficial in this climate.