The U.S. equity markets experienced another week of impressive performances. Major large-cap indices, including the S&P 500, the Dow Jones, and the Nasdaq 100, reached new all-time highs. The technology and consumer discretionary sectors were the standout performers.
Several major tech companies—Apple, Amazon.com, and Meta Platforms—attained record valuations. In November, signs of a strong recovery in the U.S. labor market emerged. Nonfarm payrolls increased by 227,000, a significant rise from the upwardly adjusted figure of 36,000 in October, surpassing the expectations of a 220,000 increase.
The unemployment rate ticked up to 4.2%, consistent with forecasts. Average hourly earnings exhibited modest growth. The consumer sentiment index from the University of Michigan indicated the most favorable overall conditions in seven months.
This was reinforced by a notable increase in the subindex for current conditions. However, the survey also pointed out heightened worries regarding inflation. Short-term expectations for inflation have risen.
A notable percentage of consumers indicated that they are accelerating purchases of durable goods amid concerns about rising prices. Furthermore, Carlos Tavares of Stellantis has stepped down, heightening market unease following a 50% drop in value anticipated for 2024. Uncertainty in leadership is now jeopardizing recovery efforts.
Nasdaq and S&P 500 achieve record levels
Analysts caution about intensifying challenges within a highly competitive landscape. Veteran trader Jason Shapiro has advised caution against going “aggressively long” on risk assets.
This advisory followed Bitcoin reaching a historic high of $100,000 before experiencing a retreat, which was mirrored by stocks on Thursday. This highlights the necessity for careful risk management and strategic positioning in fluctuating markets. Fed Chair Jerome Powell compared Bitcoin to gold, referring to it as digital and virtual.
His comments underscore Bitcoin’s increasing reputation as a speculative asset and a store of value. There are 10 S&P 500 stocks known for historically performing well in the latter half of December, covering sectors from BlackRock to Western Digital Corp. to Royal Caribbean Cruises. These reliable performers are set to take advantage of what is referred to as the Santa Rally effect, presenting investors with significant opportunities as the year comes to a close.
Some analysts attribute this rally to seasonal elements such as holiday shopping and investors finalizing their portfolios before year-end, ahead of a quieter January. Billionaire Warren Buffett, often recognized for his frugality, used to give out $10,000 cash as Christmas gifts. Family members report that he transitioned to gifting stocks, advising beneficiaries to either sell or hold onto them.
This shift, as per reports, occurred due to recipients quickly exhausting the cash. This change reflects his investment philosophy and imparts a practical lesson in fostering long-term wealth accumulation.
