Stock Market Analysis for December 12, 2024

Overview

As we approach mid-December 2024, the stock market has experienced significant fluctuations influenced by key economic indicators and geopolitical events. Last week’s trading session saw a strong rally in technology stocks, driven by positive earnings reports and optimism surrounding the artificial intelligence sector.

Key Events Impacting the Market

1. Federal Reserve Policy: The Federal Reserve maintained interest rates during their latest meeting last week. Market expectations for a rate cut in early 2025 have influenced investor sentiment positively, particularly in the growth sectors.
2. Job Reports: The December job report indicated an increase in employment numbers, suggesting strength in the labor market but also signaling potential inflationary pressures, putting the Fed’s monetary policy under scrutiny.
3. Geopolitical Tensions: Recent developments in trade negotiations with key markets in Asia have raised investor concerns, especially in sectors reliant on international supply chains.

Market Predictions for Next Week

• Technological Sector: With the ongoing advancements in AI and continued consumer demand for tech products, investors should watch for further gains in tech ETFs such as the QQQ and SPY. Expect volatility as profit-taking is likely.
• Energy Sector: Given the rise in oil prices due to OPEC+ production cuts announced last week, energy stocks like ExxonMobil (XOM) and Chevron (CVX) may see upward momentum. Keep an eye on crude oil inventory reports scheduled for Tuesday.

Recommendations for Today

Buy:

• Invesco QQQ Trust (QQQ): Buy into this ETF which tracks high-growth technology stocks that are likely to perform well as AI technology expands.
• Vanguard Energy ETF (VDE): Consider initiating or adding to positions in this ETF to capitalize on rising energy prices.

Sell:

• Tesla Inc. (TSLA): If holding, consider taking profits as the stock has seen significant appreciation recently and may face pressure ahead of the quarterly earnings report.
• NVIDIA Corp (NVDA): Given the recent rally, a tactical sell to lock in profits might be prudent ahead of potential volatility from profit-taking.

Major News to Watch

Keep an eye on:

• Inflation data report due Wednesday, which could impact Fed policy outlook.
• Upcoming earnings reports from key retail companies backing holiday sales performance predictions.

In summary, while the market shows certain bullish trends, investor vigilance is crucial as volatility is anticipated. Positioning into tech and energy selectively while managing profit-taking will be key to navigating the upcoming week effectively.