Stock Market Analysis for December 8, 2024

As we approach the trading week starting December 8, 2024, it’s essential to review the previous week’s market performance and assess influential factors shaping the upcoming week.

Market Recap of the Previous Week

Last week saw a mixed performance across major indices as investors reacted to economic indicators, earnings reports, and geopolitical tensions. The S&P 500 ended the week down about 1.2%, largely due to disappointing retail sales figures, while the NASDAQ managed a slight gain of 0.5% driven by technology stocks.

Key Events Impacting the Market

Several key events influenced the market last week:

• Federal Reserve Statements: The Fed’s comments during the week hinted at a potential pause in interest rate hikes as inflation shows signs of stabilizing. This led to a temporary rally in growth stocks, particularly in the technology sector.
• Labor Market Data: Nonfarm payroll data released last Friday was better than expected, showcasing a resilient labor market, though average hourly earnings increased, indicating persistent wage inflation.
• Geopolitical Tensions: Escalation of tensions in Eastern Europe continued to weigh on market sentiment, raising concerns over oil prices and global supply chains.

Upcoming Events to Watch

• Consumer Price Index (CPI) Release: Scheduled for December 10, investors will keenly analyze inflation data that could influence the Fed’s future policy decisions.
• Retail Earnings Reports: With the holiday shopping season in full swing, several retail giants are set to announce quarterly results that may shift market sentiment based on consumer spending trends.

Stock Recommendations

Buy:

• Tech ETFs (e.g., QQQ): As technology continues to show resilience, consider reallocating to tech-focused ETFs which might benefit from a favorable interest rate environment.
• Consumer Discretionary Stocks (e.g., Amazon, TSLA): If retail sales improve in upcoming reports, these stocks may experience uplift given their strong holiday season positioning.

Sell:

• Energy Sector Stocks (e.g., XOM, CVX): Given the uncertainty in geopolitical situations and potential declines in oil demand, it may be prudent to take profits here.
• Highly Valued Growth Stocks (e.g., some recent IPOs): If inflation data continues to show growth, high-valuation stocks may face pressure as investors rotate into more stable equities.

Conclusion

Overall, we are in a pivotal moment facing potential volatility with critical data releases ahead. Market sentiment is likely to be swayed significantly based on the upcoming economic indicators. Thus, investors should position themselves to either capitalize on opportunities or mitigate risks as we enter this uncertain timeframe.