Stock Market Analysis for December 18, 2024

As we begin this trading week, it’s crucial to evaluate last week’s performance and how current global events may drive market movements in the coming days.

Market Recap from Last Week

The stock market experienced a mixed performance last week due to a combination of improving economic data and rising interest rate concerns. The Dow Jones rose by 1.3%, while the S&P 500 closed up by 0.8%, and the NASDAQ Composite saw a 1.4% increase. Notably, the sectors leading the gains were technology and industrials, reflecting a robust earnings season.

Key Events Impacting the Market

1. Federal Reserve’s Rate Policy: Last week, the Federal Reserve held its interest rates steady but hinted at further hikes in the coming meetings. This has led to increased volatility, as investors reassess valuations with potentially higher borrowing costs.
2. Global Economic Indicators: The release of stronger-than-expected retail sales data in the US has fueled optimism, though inflation remains a significant concern.
3. Geopolitical Tensions: Heightened tensions in Eastern Europe continue to affect energy prices, leading to fluctuations in sectors reliant on oil and gas.

Key Events to Watch This Week

• Earnings Reports: Several companies, including major retailers and tech giants, are set to report their quarterly earnings. This could significantly sway market sentiment.
• Jobs Report: The upcoming employment data could provide insights into wage growth and labor market strength, further impacting the Federal Reserve’s future decisions.
• Consumer Confidence Index: A key indicator that reflects economic sentiment will be released, influencing retail stocks and broader market trends.

Investment Recommendations

Buy:

• SPDR S&P 500 ETF (SPY): Given the overall bullish sentiment and diversification, investing in this ETF is prudent as it captures the performance of the broader market.
• NVIDIA Corporation (NVDA): Strong demand for AI and gaming technologies makes NVIDIA a solid buy, especially considering its upcoming product launches.

Sell:

• Energy Select Sector SPDR Fund (XLE): Due to the fluctuating energy prices and geopolitical tensions, it might be wise to take profits due to potential volatility in the sector.
• Zoom Video Communications (ZM): As more businesses return to in-person meetings, growth expectations may not meet current valuations, recommending a cautious approach.

Conclusion

As news unfolds in the coming week, it is essential to stay informed and adjust portfolios accordingly. Keep an eye on economic indicators and earnings reports, as they are pivotal in determining market direction. Happy investing!