Stock Market Analysis for December 19, 2024

As we begin trading on December 19, 2024, the markets are responding to several key economic indicators and world events that could shape investor sentiment in the coming weeks. Here’s a concise overview of recent market performance and anticipated movements.

Recent Market Performance

Last week, the S&P 500 gained 1.5%, driven by strong earnings reports from mega-cap companies like Apple and Microsoft, which continue to outperform in the technology sector. The Nasdaq saw even stronger gains at 2% following renewed interest in tech stocks, while the Dow Jones Industrial Average was slightly muted, up only 0.5% as industrial stocks bore the brunt of investor caution amidst rising inflation concerns.

Key Events Impacting the Market

• Inflation Data Release: On December 15, the Consumer Price Index (CPI) showed that inflation slowed to 3.2% year-over-year, slightly better than expected but still a persistent concern. This report contributed to short-term gains but raises questions about the Federal Reserve’s future interest rate decisions.
• Geopolitical Tensions: Ongoing tensions in Eastern Europe have led to fluctuations in energy prices, impacting stocks in the oil and gas sector.

Events to Watch Next Week

• FOMC Meeting: The Federal Open Market Committee is scheduled to meet next week to discuss interest rates. Any guidance on future hikes could potentially swing market sentiment dramatically.
• Earnings Reports: Several key companies, including Tesla and JPMorgan, are set to release their Q4 earnings next week, which could influence market direction.

Recommendations

Buy:

• SPY ETF (S&P 500 ETF): Given the current market momentum and the slowdown in inflation, consider adding to your position in SPY for broad market exposure.
• AAPL (Apple Inc.): With robust earnings and continued innovation in products, AAPL remains a strong buy for long-term growth.

Sell:

• XLE ETF (Energy Select Sector SPDR Fund): With rising geopolitical risks affecting energy markets, it may be prudent to take profits or reduce exposure to XLE.
• MMM (3M Company): Concerns about a prolonged downturn in manufacturing could lead to continued underperformance, warranting a reduction or exit from this position.

In conclusion, as we head into the final weeks of December 2024, investors should remain vigilant about upcoming economic indicators and corporate earnings that could impact stock prices.