Stock Market Analysis for November 23, 2024

The stock market has experienced fluctuating performance over the past week, influenced by several significant events. Key market indices rallied initially but faced a pullback midweek as investors reacted to economic data releases and geopolitical tensions.

Key Events Impacting the Market

1. Economic Data:

• The latest consumer inflation report showed an increase of 0.3% month-over-month, slightly above expectations. This raised concerns about the Federal Reserve’s possible interest rate hikes in 2025.
• Unemployment claims also edged up, suggesting potential softness in the labor market, which may influence the Fed’s decisions.

2. Geopolitical Tensions:

• Ongoing tensions in Eastern Europe have had a ripple effect on energy prices, impacting stocks tied to the energy sector positively, while other sectors remain cautious.
• Relations between major economies have affected market sentiment, causing volatility.

3. Earnings Reports:

• Several major tech companies reported mixed earnings, leading to fluctuations in the Nasdaq. Companies like Apple and Amazon fell slightly after guidance forecasts were lower than expected.

Market Performance

• The S&P 500 closed down 1.2% by the week’s end, mainly driven by the tech sector’s pullback.
• In contrast, the Dow Jones Industrial Average ended the week relatively flat, showing resilience amidst market volatility.
• The NASDAQ Composite was the hardest hit, down 2.5%, primarily due to disappointing tech earnings.

Looking Ahead: Events to Watch

• Upcoming inflation data scheduled for release next week will be critical, as many investors will closely monitor this to gauge future Fed actions.
• The minutes from last Federal Reserve meeting will be released next Wednesday, providing insights into the Fed’s economic outlook and potential policy adjustments.
• The ongoing earnings season will continue, with significant reports from Netflix and Meta Platforms, which could further influence market sentiment, especially in technology stocks.

Recommendations Based on Current Analysis

Buy:

• SPDR S&P 500 ETF (SPY): As a long-term investment, it provides exposure to a diversified portfolio of large-cap U.S. stocks. The potential for growth remains positive despite recent short-term volatility.
• Energy Select Sector SPDR Fund (XLE): With rising energy prices linked to geopolitical tensions, this ETF could see continued strength in the coming weeks.

Sell:

• Apple Inc. (AAPL): Given its recent disappointing forecast and potential challenges in product launches, locking in profits could be wise ahead of further volatility.
• Nasdaq-100 ETF (QQQ): Short-term traders might consider selling QQQ as tech stocks face headwinds and uncertainty in guidance.

As we approach next week, staying vigilant about economic indicators and trimming positions in volatile sectors could safeguard investments in this unpredictable market environment.