The U.S. stock market is entering December 2024 with notable fluctuations and opportunities as index futures are slightly lower following the Christmas holiday. After the recent rally where megacap stocks outperformed, trading volumes across exchanges are expected to be thin due to the festivities. Currently, S&P 500 Futures are down 0.45% at 6,011.10 points, and Nasdaq 100 Futures have seen a decline of 0.5%. Meanwhile, Dow Jones Futures fell by 0.4% to 43,075.80 points.
Despite this slight downturn, the tech sector remains at the forefront of investor attention, especially the so-called Magnificent Seven, which includes giants like Tesla Inc. and Amazon.com Inc. Tesla’s stock surged over 7%, demonstrating the market’s confidence amid holiday spending. Apple Inc. also rose by 1.2%, showcasing continued consumer interest and solid performance from major tech players.
The tech rally can be linked to several factors, including the initiation of investigations by the Biden administration against Chinese-manufactured legacy chips, hinting at potential tariffs. This investigation has seen chip manufacturers like Broadcom and Intel gain traction on the stock market. Broadcom jumped over 3% as traders responded positively to the news, underscoring the significance of the chip sector within the broader tech industry.
Last week, the Federal Reserve’s outlook also played a role, projecting fewer-than-expected monetary policy cuts for the upcoming year. This anticipated approach led to initial declines across major stock indices, but the markets have since recovered significantly as trading resumed. Investors seemed to view this cautious projection favorably, acknowledging the Fed's intent to address inflation responsibly without severe shocks to the market.
Wall Street is gradually recovering from recent downturns induced by the Fed's announcements. The previous trading week witnessed sharp declines across all three major indices; nevertheless, gains over the last couple of sessions have restored much of the lost ground. Market analysts are now predicting significant earnings growth of 15% annually, supported by favorable economic indicators.
For investors eyeing hidden opportunities, companies with strong fundamentals remain on the radar. These include lesser-known entities like Sezzle Inc., which, operating primarily within the payments sector, reported impressive earnings growth of 1,070% over the past year. Its partnerships with companies like Bealls Inc. suggest strategic movements aimed at capitalizing on peak shopping seasons. Sezzle's prudent debt management solidifies its position as an undiscovered gem as the holiday shopping season continues.
Investors are also cautioned about the upcoming year, where geopolitical factors and external economic conditions, potentially influenced by the Trump administration’s policies and international tensions surrounding oil exports from Iran and Venezuela, could impact energy prices and broader market conditions. Analysts predict average crude oil prices to hover around $61 per barrel for U.S. crude and $65 for Brent crude by 2025, hinting at declining prices driven by surplus production.
While energy prices could fluctuate due to such global dynamics, the tech sector is expected to maintain its stronghold, particularly as AI infrastructure demands continue to grow. The rapidly developing intersection of technology and energy is prompting major oil and gas companies to invest heavily to meet soaring demands from data centers powered by AI models.
Overall, the outlook for December 2024 remains cautiously optimistic. Investors are advised to keep track of economic indicators, Federal Reserve actions, and the movements of key stocks and sectors. Engaging with market data and performance metrics will be pivotal as they navigate the final weeks of the year, searching for opportunities as the market stabilizes after the holiday fluctuations.
