USA Outlook, December 23 to 27, 2024

USA OUTLOOK WEEKLY NEWSLETTER DEC 23 TO DEC 27

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DEC 23, 2024

DEC 24, 2024

Wall Street ends higher as Santa rally begins Wall Street’s main indexes closed higher on a shortened Christmas Eve trading session, with gains in megacap and growth stocks leading the charge. The Dow Jones and Nasdaq recorded four consecutive days of gains, while the S&P 500 extended its winning streak to three sessions, marking the start of the Santa Claus rally.

Photo: Reuters

How investments may fare during Trump 2.0 and Fed easing U.S. investors are bracing for significant changes in 2025 as President-elect Donald Trump returns to the White House, bringing potential shifts in tariffs, deregulation, and tax policies. These changes are expected to impact stocks, bonds, and currencies, prompting portfolio adjustments.

Forecasts suggest another strong year for equities, continued dollar strength, and rising Treasury yields.

U.S. economic exceptionalism is anticipated to persist, supported by resilient consumer spending, a strong labor market, and potential corporate tax cuts that could boost earnings and stock sentiment.

In contrast, the euro-zone faces challenges from trade tensions with China, possible U.S. tariffs, and low consumer confidence.

Megacap stocks, including the “Magnificent Seven” technology companies, drove the market, with Tesla jumping 7.4%, its best single-day performance in six weeks. This lifted the consumer discretionary sector by 2.6%, making it the bestperforming sector in the S&P 500, where all 11 sectors ended in positive territory.

Chipmakers also performed well, with Broadcom and Nvidia gaining 3.2% and 0.4%, respectively, while Arm Holdings rebounded 3.9% after losses from a court ruling. Despite elevated U.S. Treasury yields, long-term optimism about technology and advancements in AI supported growth stocks.The S&P 500 rose 1.10% to 6,040.04 points, the Nasdaq advanced 1.35% to 20,031.13, and the Dow Jones added 0.91% to close at 43,297.03. Markets closed early at 1:00 p.m. ET and will remain shut for Christmas Day.

Key concerns for 2025 include the Federal Reserve’s approach to interest rate cuts, which have buoyed stocks but face headwinds from rising Treasury yields. The Fed has slowed the pace of rate reductions following aggressive hikes.

Photo: Andrew Kelly Source:

Source:

https://www.theguardian.com/us-news/ https://www.reuters.com/markets/us/howThe U.S. dollar is forecast to maintain its investments-may-fare-during-trump-20-fed-easing-2024-12-23/

momentum, driven by robust economic growth,

https://www.reuters.com/markets/us/futures-muted-before-shortened-christmas-evetrading-2024-12-24/

DEC 25, 2024

DEC 26, 2024

New US jobless claims slip, but people are remaining unemployed for longer

Photo: Reuters

Dollar gains on yen on bets of US growth, inflation The U.S. dollar reached a five-month high against the Japanese yen, driven by expectations that incoming Trump administration policies, including tax cuts and deregulation, will boost economic growth and inflation.

Despite uncertainty around the implementation and impact of these policies, the dollar has strengthened, supported by doubts about the Federal Reserve’s ability to cut interest rates further next year.

New U.S. jobless claims fell slightly last week to 219,000, the lowest level in a month, reflecting a stable labor market despite slowing hiring.

Continued unemployment claims, which track people staying on benefits beyond the first week, rose to 1.91 million, the highest since November 2021, signaling that unemployed individuals are taking longer to find new jobs. However, layoffs remain muted, and the total level of continued claims is only marginally higher than a year ago, suggesting no major labor market deterioration.

The average duration of unemployment in November increased to 23.7 weeks, its highest since April 2022, as hiring has slowed. December’s job growth is expected to decelerate from November’s 227,000 jobs, with an initial projection of 170,000 jobs added. Despite these trends, Federal Reserve officials are unlikely to adjust interest rates further, as they view the labor market and inflation risks as balanced.

Last week, the Fed cut rates by 25 basis points and revised its inflation forecast for 2025 upward while lowering its rate projection. Current market pricing reflects a 50% chance of a second rate cut next year.

Meanwhile, U.S. jobless claims dropped to a onemonth low, indicating a cooling but stable labor market. Retail sales also rose 3.8% during the holiday season, aided by heavy promotions.

Photo: Reuters

The dollar index remains near a two-year high, while the yen continues to weaken due to Japan’s low interest rates. Bitcoin fell 2.88%, trading at $95,598. .

Source:

https://www.reuters.com/markets/currencies/dollar-edges-up-bets-us-growth-inflation2024-12-26/

Source:

h https://www.reuters.com/markets/us/us-weekly-

jobless-claims-fall-slightly-2024-12-26/

DEC 27, 2024

Photo: Reuters

Wall St Week Ahead Trump's first actions and job data to test market in January After a stellar year for U.S. markets in 2024, with the S&P 500 gaining nearly 27% and the Nasdaq Composite soaring 33.4%, investors are optimistic about continued momentum into early 2025. The so-called “Santa Claus rally,” a period of market strength during the last five trading days of December and the first two in January, has fueled recent gains, with the S&P up 2.91% and the Nasdaq rising 3.3% over the last four sessions.

Looking ahead, key events will shape market performance: 1.

Economic Data: U.S. employment figures on Jan. 10 will offer insights into economic health, following strong job growth in November.

2.

Earnings Reports: Fourth-quarter corporate earnings will begin shortly after, with a projected 10.6% earnings-per-share growth for 2025, down from 12.16% in 2024.

3.

Policy Changes: President-elect Donald Trump’s inauguration on Jan. 20 could bring significant policy shifts. Expected actions include executive orders on immigration, energy, and cryptocurrency, as well as potential tariffs on imports from China, Mexico, and Canada.

While lower taxes and deregulation could boost corporate profits in sectors like banking, energy, and crypto, concerns about tariffs and immigration policies may create cost pressures. Investors remain cautiously optimistic as the new year approaches.

Source:

https://www.reuters.com/markets/us/wall-st-week-ahead-trumps-first-actions-job-datatest-market-january-2024-12-27/