Stock Market Update Friday October 25, 2024 An initial upward gap in equities encountered selling pressure, causing the S&P 500 to retrace its gains and end flat. This downward shift concluded the S&P 500's six-week rally, resulting in a roughly 1% loss over the last trading week. Meanwhile, the Nasdaq 100 edged up 0.6%, driven by resilient momentum in technology stocks. The Nasdaq Composite reached a fresh all-time high today, marking its first peak since July. US Consumer Sentiment rose to a six-month high on rate relief. Tesla continued its post-earnings rally, advancing another 3% on top of yesterday’s substantial 20% surge, underscoring robust investor confidence in the stock’s future growth. The Magnificent Seven stocks—comprising Tesla, Alphabet, Meta, Microsoft, Apple, Amazon, and Nvidia—all recorded gains, with heightened anticipation ahead of major earnings reports from Alphabet, Meta, Microsoft, Apple, and Amazon scheduled for next week. Today’s session saw technology lead sector performance, closely followed by communication services.
Away From Stocks: Treasury yields saw an upward movement of four basis points nearly across the curve, with the two-year note closing at 4.11% and the 30-year bond yielding 4.51%. In the commodities space, WTI crude prices rebounded, approaching $72 per barrel, while gold advanced modestly to settle around $2,745 per ounce, reflecting a mild safe-haven demand. Meanwhile, Bitcoin softened slightly, trading lower at $66,800, and the VIX, often a barometer of market volatility, climbed back above the 20-mark, signaling an uptick in investor caution.
Our previous pivot date was October 8th, during which the SPY rallied for seven trading days, reaching a record high on October 17th. Another cycle pivot date is anticipated on October 29th; traders should prepare for heightened volatility as market participants position themselves ahead of the upcoming 2024 election. Next week will be pivotal for earnings releases, which have been robust to date, along with macroeconomic updates. This earnings season underscores solid fundamentals, with "real revenue" growth—adjusted for inflation—accelerating to a 2% pace, signaling a qualitative improvement in earnings. This trend highlights that companies are achieving not just nominal gains but real, inflation-adjusted growth, underscoring stronger underlying business performance and operational resilience in a challenging economic environment.
Bottom Line:
Our previous pivot date was October 8th, and the SPY rallied for seven trading days to a record high on October 17th. This pattern of sideways, choppy price action is characteristic of October in an election year. We have a cycle pivot date on October 29th; traders should anticipate increased volatility leading up to this date as market participants position themselves ahead of the upcoming 2024 election.
The SPY ETF, QQQ ETF, IWM ETF, and DIA have all activated bullish buy signals, with no signs of a market top or imminent reversal. Our year-end outlook remains optimistic, supported by our proprietary algorithm and favorable liquidity conditions. Cash on the sidelines continues to accumulate, creating potential for a strong inflow into equities. Jerome Powell & Co. maintain a dovish stance, reflecting a 'no landing' economic scenario, while China's PBOC has introduced significant monetary easing, adding further global stimulus. Market participants are closely monitoring the upcoming U.S. election results, but we anticipate a favorable market reaction regardless of the outcome, as either candidate is expected to support short-term growth. October's volatility aligns with historical seasonal patterns, yet we believe markets will resume an upward trajectory following the election, paving the way for a strong December rally. The VIX is projected to settle in the 10-11 range, indicating a reduction in implied volatility as we approach the holiday season, which typically supports a risk-on sentiment in equity markets.
