Stock Market Analysis for December 6, 2024

Overview

As the market opens on December 6, 2024, investors are grappling with several key events that have influenced market sentiment over the last week.

Key Events Impacting the Market

1. U.S. Employment Data: The release of the non-farm payroll report showed an increase of 250,000 jobs in November, surpassing expectations. The unemployment rate held steady at 3.6%, reigniting discussions about potential interest rate hikes from the Federal Reserve in 2025.
2. Inflation Concerns: The Consumer Price Index (CPI) rose by 0.4% month-over-month in November, indicating persistent inflation, which could lead to tighter monetary policy.
3. Geopolitical Tensions: Escalating tensions in Eastern Europe, particularly around trade sanctions on Russia, continue to create uncertainty in the energy sector, contributing to volatility in oil prices.
4. Tech Sector Dynamics: After a notable earnings drop, major tech firms such as Meta and Alphabet have seen their stock prices stabilize, suggesting that fear may have peaked, but overall cautious sentiment persists.

Market Recap from Last Week

The S&P 500 ended the last week up by 1.5%, while the NASDAQ Composite saw a modest gain of 0.7%. Energy stocks have experienced notable fluctuations due to oil price changes, closing out the week strong.

Predictions for the Upcoming Week

• Maintaining Support Levels: The S&P 500 appears to have found short-term support at 4,500. If it holds above this mark, it could push towards 4,600.
• Caution in Sectors: Tech and consumer discretionary sectors may continue to face headwinds due to inflation concerns, suggesting a more defensive investment approach.
• Potential Rate Hike Speculation: As more economic data rolls in, attention will turn to Fed speculation, especially in the lead-up to their next meeting in mid-December.

Events to Watch

• Federal Reserve Meeting: Scheduled for December 12, this meeting is expected to provide clarity on monetary policy amidst fluctuating inflation metrics.
• Retail Sales Data: Set to be released on December 15, this data will be crucial for gauging consumer spending trends as we head into the holiday season.

Recommendations

• Buy: Consider ETFs like SPY (SPDR S&P 500 ETF) for long-term exposure and XLI (Industrial Select Sector SPDR Fund) for capitalizing on infrastructure investments.
• Sell: If holding individual tech stocks, particularly META and GOOGL, it may be prudent to rebalance portfolios given potential volatility.

In summary, as we proceed into a crucial week, investors should monitor economic indicators carefully and adjust their strategies accordingly.