Introduction
Wall Street rallied to end the week on a positive note, recovering from earlier jitters with a strong surge on Friday. Technology and energy stocks led the rebound, driving investor optimism.
Weekly Market Overview
The major indices posted solid gains to close the week:
S&P 500: Up 73.92 points (+1.26%) to 5,942.47 Dow Jones Industrial Average: Gained 339.86 points (+0.8%) to 42,732.13 Nasdaq Composite: Advanced 340.88 points (+1.77%) to 19,621.68 Despite the rebound, the indices ended the week with slight losses, snapping a five-day losing streak.
S&P 500: Down 0.48% for the week Dow: Lost 0.60% Nasdaq: Declined 0.51% The much-anticipated "Santa Claus Rally" failed to materialize this year. Still, markets remain near record highs, capping off a strong 2024.
Tech Stocks Lead the Charge
Technology stocks were the standout performers, fueled by renewed enthusiasm around artificial intelligence.
Nvidia surged 4.7% Super Micro Computer soared 10.9% Microsoft added momentum, announcing an $80 billion investment in AI-driven data centers by fiscal 2025 This wave of spending is expected to boost both the tech and energy sectors, with power producers like Constellation Energy (+4%) and Vistra (+8.5%) benefiting from increased demand.
Expert Opinions on the Market Recovery
“The growth drivers supporting earnings over the past two years remain robust,” said Jeremiah Buckley, portfolio manager at Janus Henderson Investors. Mark Hackett, chief market strategist at Nationwide Financial, characterized Friday’s recovery as an "orderly consolidation," dispelling fears of a broader downturn.
Sector Highlights: Washington’s Influence
While the rally lifted most sectors, some stocks lagged:
U.S. Steel fell 6.5% after President Biden blocked its acquisition by Nippon Steel. Beverage stocks, including Molson Coors (-3.4%), faced pressure after a U.S. Surgeon General advisory on alcohol's cancer risks. Outlook for Corporate Earnings Fourth-quarter earnings guidance remains cautious, with 67% of S&P 500 companies issuing negative projections—above the five- and ten-year averages.
Information technology, industrials, and consumer discretionary sectors led the downbeat forecasts. UBS Sees a Strong 2025 for the S&P 500 Despite short-term challenges, UBS projects a 12.5% gain for the S&P 500, reaching 6,600 by year-end 2025. David Lefkowitz, UBS Chief Investment Officer for U.S. Equities, attributes this outlook to 9% profit growth. However, he warns of potential volatility from trade policy shifts, congressional fiscal battles, and inflation risks. “As long as corporate earnings stay strong, stocks should perform well,” Lefkowitz noted.
Looking Ahead
As markets head into 2025, key drivers to watch include earnings reports, fiscal policy developments, and the continued expansion of AI-related investments. While volatility may persist, Wall Street remains optimistic about long-term growth opportunities.
Stay tuned for next week’s issue, where we’ll dive deeper into the earnings season and its implications for 2025 market trends.