Introduction
The Dow Jones Industrial Average extended its losing streak on Friday, marking its seventh consecutive day of declines. This represents the longest such streak since 2020, with the index slipping 86.06 points, or 0.2%, to settle at 43,828.06. Meanwhile, the Nasdaq Composite showed some resilience, gaining 0.12% to close at 19,926.72, and the S&P 500 remained largely unchanged at 6,051.09.
Weekly Market Overview
For the week, the Dow posted a 1.8% loss, while the S&P 500 slipped by 0.6%, ending its three-week streak of gains. Conversely, the Nasdaq showed a slight uptick of 0.3%.
Market Outlook: Stagnant Range, with Nasdaq Outperformance Expected
Jay Hatfield, CEO of Infrastructure Capital Advisors, suggested that the market is "stuck in this trading range" for the time being. He pointed out that until a new catalyst emerges, the Nasdaq will likely continue to outperform, small-cap stocks will lag, and the Dow will remain under pressure.
Sector Performance: Mixed Results Across the Board
Notable stock performances included Nvidia, which dropped over 2%, while Meta Platforms and Amazon also experienced slight declines. On the other hand, Broadcom made a remarkable move, reaching a market capitalization of $1 trillion after reporting a 220% increase in artificial intelligence-related revenue and surpassing earnings expectations. Despite this, the Nasdaq Composite dipped below the 20,000 mark, as the Dow continued its downward trend.
Equity Market Outlook: Cautiously Optimistic with Year-End Targets
Despite recent losses, analysts maintain a cautiously optimistic stance for the equity markets’ long-term prospects. Piper Sandler’s Chief Market Technician, Craig Johnson, predicts that the S&P 500 will finish the year at 6,100 and expects an even higher target of 6,600 for 2025. He recommends using "healthy pullbacks" as opportunities to add to positions.
Currency Update: U.S. Dollar Strengthens Amid Global Volatility
The U.S. dollar strengthened by 0.7% against the yen, reaching a rate of 153.73 on Friday. For the week, the dollar gained 0.7% against the yen. Meanwhile, the euro rose by 0.3% against the dollar on Friday but ended the week 0.7% lower. The South Korean won also weakened, losing 0.4% amid political instability surrounding an impeachment vote against President Yoon Suk Yeol.
Tech Sector: Caution Amid Slowing Growth
Investor sentiment in the tech sector remains cautious. Dan Niles, a prominent tech investor, voiced concerns about the "Magnificent Seven" stocks, including Apple, Microsoft, and Google. With growth slowing and valuations at high levels, Niles is less optimistic about these stocks than in previous years. He expects a slowdown in artificial intelligence spending, which has been a key growth driver for many tech firms.
Technical Strategist’s Forecast: Positive Finish for 2024
Technical strategist Katie Stockton remains optimistic about a strong finish for 2024, citing momentum in large-cap stocks. However, she anticipates a correction in the first quarter of 2025. Stockton advises caution, recommending investors hold off on new purchases unless there is a clear catalyst and maintain cash reserves to take advantage of opportunities when the market corrects.
Stock Highlights: New 52-Week Lows and Highs
During Friday’s session, 14 stocks within the S&P 500 hit new 2-week lows**, including ConocoPhillips, Cigna, and CVS Health. Conversely, 8 stocks reached new 52-week highs, with standout performances from Broadcom, Tesla, and O’Reilly Auto, all hitting all-time highs.
Conclusion: Volatility Continues Amid Cautious Optimism
As the week wraps up, markets are seeing a mix of volatility and cautious optimism. With a potential correction looming and growth slowing in certain sectors, investors are advised to stay vigilant as we approach the year’s end.
Stay tuned for next week’s issue, where we will take a closer look at upcoming earnings reports and their impact on market sentiment.