Exactly one year ago, we witnessed a substantial increase in stocks reaching new 20-day highs.
The S&P 500 had experienced gains in 15 out of 15 instances a year later.
That makes it 16 out of 16 following today’s developments.
If you looked closely, there were signs that this year would be favorable.
— Ryan Detrick, CMT (@RyanDetrick) December 5, 2024
Although major indexes declined this past Wednesday, they rebounded from their lows as Treasury yields continued to fall. Dow Jones futures saw a slight increase early Friday, accompanied by advances in S&P 500 futures and Nasdaq futures, leading into a half-day trading session. On Wednesday evening, President-elect Donald Trump shared on Truth Social that he had a conversation with Mexico’s President Claudia Sheinbaum, who he claims has agreed to resolve illegal migration across the Mexican border.
Sheinbaum indicated that caravan movements had already been curtailed.
November nonfarm payrolls rose by 227k compared to an estimate of 220k & revised up from 12k to +36k in the previous month … marking the strongest increase since March.
— Liz Ann Sonders (@LizAnnSonders) December 6, 2024
Trump’s announcement of a win may boost optimism on Wall Street that he might refrain from implementing his proposed 25% tariffs on Canada and Mexico upon taking office, along with a 10% extra tariff on Chinese imports. Dow Jones futures increased by 0.3% compared to fair value. Meanwhile, S&P 500 futures rose by 0.2%, and Nasdaq 100 futures also climbed by 0.2%. The yield on the 10-year Treasury dipped to 4.23%.
From John Authers’ daily update:
“In absolute figures, the S&P 500 has now reached its 56th all-time high this year, which is noteworthy. However, U.S. stocks’ performance compared to global markets is even more impressive.”@opinion #markets #investing #investors @johnauthers
— Mohamed A. El-Erian (@elerianm) December 5, 2024
Crude oil futures saw a slight increase. Bitcoin climbed back to slightly above $97,000, nearing the $100,000 mark after nearly reaching it on Nov. 22.
U.S. stock markets are scheduled to close early this Friday at 1 p.m. ET, with bond markets set to close at 2 p.m. ET. Shares of semiconductor equipment manufacturers rose following a Bloomberg report indicating that the U.S. will apply new chip export restrictions on China, although these measures are less stringent than earlier proposals. The stock market rally faced a generally weak session, as disappointing tech earnings and ongoing issues with Nvidia contributed to pre-holiday selling.
Nonetheless, the primary indexes have all seen gains for the week, hovering around their all-time highs. The Dow Jones Industrial Average dropped 0.3% on Wednesday. The S&P 500 index fell by 0.4%.
Continued Rise in U.S. Stock Market
The Nasdaq composite saw a 0.6% decline. The small-cap Russell 2000 inched up by 0.1% but finished significantly off its highs.
U.S. crude oil prices decreased by 5 cents, settling at $68.72 per barrel. The 10-year Treasury yield fell by 6 basis points to 4.24%, down 17 basis points so far this week. Nvidia shares dropped 1.15% to 135.34 but recovered from lows to prevent a close below the 50-day moving average for the first time in two months.
The stock plunged to as low as 131.80, narrowly crossing below a short-term low and getting close to triggering an automatic sell rule from the 140.76 buy point. It was encouraging to observe buyers defending the 50-day line, but NVDA stock still declined on Wednesday, down 4.7% this week. Additionally, the shares ended just below the 10-week line.
The AI chip powerhouse has faced challenges since briefly reaching a new record of 152.89 on Nov. 21 after its earnings report. Although Nvidia’s earnings were robust, the revenue guidance for Q4 was only marginally above consensus, despite executives expressing optimism regarding the upcoming Blackwell AI chip.
Nvidia stock experienced a slight uptick early Friday, moving up from the 50-day line while remaining below both the buy point and the 21-day line. The stock market rally is progressing positively, characterized by a broad-based advance. Small and mid-cap stocks are taking the lead, alongside financials, homebuilders, and various non-tech sectors.
Nvidia and several other chip-based companies are currently struggling, as are software firms in recent times. Investors need to pay attention to successful sectors rather than strictly adhering to tech stocks at all times. Conducting stock screens can provide valuable insights.
By concentrating on fundamental criteria and chart analysis, investors can eliminate personal bias and recognize leading stocks and sectors. While investors may not feel compelled to make drastic moves now, they might contemplate incremental acquisitions or add-on buying while trimming underperformers and lagging stocks.
