The stock market experienced mixed performance during the holiday-shortened week leading up to Christmas. Gains were largely propelled by technology and communications stocks, which helped offset declines from several consumer goods companies. Notably, semiconductor giant Nvidia saw its shares rise by 3.7% after demonstrating strong performance, showcasing how influential its significant valuation is on market indices. Broadcom also contributed positively with a 5.5% increase.
Conversely, traditional stalwarts like Walmart and PepsiCo faced declines of 2% and 1%, respectively, reflecting investors' cautious sentiments. This week, Honda and Nissan made headlines by announcing discussions to merge, with shares of Honda skyrocketing by 16% following the news of their proposed collaboration. Nissan's share price remained nearly unchanged, shedding just 0.1%.
On the pharmaceutical front, Eli Lilly’s stock increased by 3.7% after receiving regulatory approval for Zepbound, the first prescription medication for sleep apnea aimed at adults. Meanwhile, Nordstrom announced its agreement to go private through a $6.25 billion deal, resulting in its shares falling by 1.5%.
Overall, the S&P 500 witnessed an uplift of 43.22 points, closing at 5,974.07; the Dow Jones gained 66.69 points, settling at 42,906.95, and the Nasdaq jumped 192.29 points to reach 19,764.89. The optimistic figures from technology stocks were somewhat tempered by disappointing news from the Conference Board, which reported a decrease in consumer confidence. The index slipped from 112.8 in November to 104.7, falling short of Wall Street's expectations, which had anticipated 113.8.
This latest consumer confidence reading follows several weeks of stronger economic indicators, including reports of the U.S. economy growing at a 3.1% annualized rate during the summer—faster than previously estimated. Job market resilience was also exhibited through continued strong unemployment benefit applications, indicating stability even amid locations of rising inflation concerns.
The Federal Reserve's focus on inflation has heightened anxiety on Wall Street, particularly as inflation rates remain stubbornly above the 2% target. Investors remain cautious about the central bank’s policy signals. The Fed recently delivered its third cut to interest rates this year but indicated fewer reductions might occur next year due to inflationary fears.
"Put simply, much of the strong market performance prior to last week was driven by expectations of a best-case scenario as the base case for 2025," stated Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management Company, explaining the influence of optimistic anticipation on current market conditions.
Treasury yields reflected some market shifts, with the yield on the 10-year Treasury note rising to 4.59% from 4.53% seen at the close of last week. European stock markets mostly closed lower, contrasting with gains observed across Asian markets, where the Japan's Nikkei saw some fluctuations over the week.
Looking forward, traders are awaiting several economic updates. On Tuesday, the U.S. is set to release its report on newly constructed home sales. A weekly unemployment benefits update is expected on Thursday as the market gears up for early closings due to the Christmas holiday on Wednesday, after operating on short hours on Christmas Eve.
This week’s data will play a pivotal role as markets navigate uncertainties burgeoning from labor market dynamics and economic policies under the incoming Trump administration. Traders remain observant of these trajectories as they strive to anticipate how the stock market will perform heading toward the new year, particularly with the potential for revised interest rate strategies.
