Wall St Week Ahead Investors hope for 'Santa Claus' rally as stocks lose steam
U.S. stocks have faced a challenging December despite an otherwise strong 2024, with the S&P 500 up over 23% for the year but weighed down by its sharpest one-day drop since August following the Fed’s signals of fewer rate cuts in 2025. Seasonal optimism tied to the “Santa Claus Rally” is dampened by rising Treasury yields, expensive stock valuations, and Congress’s rejection of a bill to avert a partial government shutdown. While some strategists see the recent pullback as a chance to reset frothy sentiment, narrow market breadth and declining technical indicators raise concerns about further downside risks.
US retail sales showcase economy's enduring strength
U.S. retail sales rose 0.7% in November, surpassing expectations, driven by strong purchases of motor vehicles and online merchandise despite economic challenges. Year-on-year, sales increased 3.8%, reflecting consumer resilience supported by a robust labor market, rising wages, and strong household balance sheets. Core retail sales, closely tied to GDP, grew 0.4% last month, with consumer spending expected to drive a 3.1% GDP growth rate in Q4.
However, some sectors showed signs of weakness, including declines in clothing, grocery, and dining sales, as high financing costs and slower income growth pressured low-income households. Meanwhile, manufacturing remains sluggish, impacted by lingering effects of Federal Reserve policy tightening and disruptions like Boeing’s recent strike. Economists warn of potential tariffrelated price pressures slowing consumption into 2024.
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Source: hhttps://www.reuters.com/markets/us/us-retail-sales-beat-expectations-november-2024-12-
Photo: Reuters
US Stocks dive after Fed cuts rates, signals slower easing pace in 2025
U.S. stocks plunged Wednesday after the Federal Reserve cut rates by 25 basis points but signaled cautious easing for 2025. The Dow fell 2.58%, extending its longest losing streak since 1974, while the S&P dropped 2.95% and the Nasdaq lost 3.56%. Small-cap stocks and all 11 S&P sectors declined, with consumer discretionary and real estate leading losses. Rising Treasury yields and a spike in the CBOE Volatility Index added to investor jitters. Despite the drop, markets remain up for the year, driven by tech gains and AI optimism, though concerns over inflation and tariffs weigh on sentiment.
Cryptocurrency stocks also tumbled, with MicroStrategy falling 9.5%, MARA Holdings dropping 12.2%, and Riot Platforms losing 14.5%, following Fed Chair Powell's remarks dismissing speculation about central bank involvement in bitcoin ownership. Additionally, market breadth weakened sharply as declining issues outnumbered advancers nearly 9-to1 on the NYSE. Trading volume surged to 18.59 billion shares, far above the 20-day average, reflecting heightened market volatility and investor uncertainty.
US new vehicle sales set to rise 7.3% in December, report says
U.S. new vehicle sales are expected to rise 7.3% in December, driven by increased discounts, though this growth is smaller than last year’s 13% projection, according to J.D. Power and GlobalData. Despite declining per-unit profits, strong consumer demand, higher inventory, and leasing activity have sustained year-end performance, with December sales forecasted at 1.52 million units and a seasonally adjusted annualized rate (SAAR) of 17.2 million.
Interest in electric vehicles (EVs) is declining, with only 25% of buyers considering an EV, down 2% from last year, impacting Tesla’s market share. U.S. auto sales are projected to reach 16.18 million units in 2025, though affordability issues will likely persist.
Source: hhttps://www.reuters.com/markets/us/futures-inch-higher-markets-await-fed-decision2024-12-18/
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h https://www.reuters.com/business/autostransportation/us-new-vehicle-sales-set-rise-73december-report-says-2024-12-19/
U.S. stocks rallied on Friday, recovering from two days of losses, as a lower-than-expected 2.4% rise in November’s PCE inflation and dovish remarks from Federal Reserve officials lifted market sentiment. The data encouraged traders to adjust their outlook, now expecting rate cuts in March and October 2025, a revision from earlier expectations of a slower timeline. Despite Friday's rebound, all major indexes ended the week lower, weighed down by a sharp sell-off midweek following the Fed’s announcement of its third rate cut this year. The central bank surprised markets by signaling only two rate cuts in 2025, down from September’s projection of four, reflecting concerns about persistent inflation and the economy’s resilience.
Adding to the cautious tone, Fed officials highlighted growing uncertainties around fiscal policies, such as tariffs and government spending, which could pose risks to the broader economic outlook. Meanwhile, Treasury yields climbed to multi-month highs, further pressuring equity valuations. Investors remain wary, balancing optimism about easing inflation against concerns over tighter monetary policy and fiscal headwinds. The week’s developments have set a complex stage for the year’s final trading days, as markets assess whether the recent pullback could pave the way for a more sustainable rally or signal deeper volatility ahead.
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https://www.reuters.com/markets/us/futures-hit-by-government-shutdown-fears-aheadinflation-data-2024-12-20/