Stock Market Update Monday December 9, 2024 Market Recap: Stocks Fall as Nvidia Faces Antitrust Probe Investor sentiment dipped early in the week after Chinese regulators launched an antitrust investigation into Nvidia, impacting global markets. The S&P 500 dropped 0.5%, while the Nasdaq 100 fell 0.8%.
Away From Stocks:U.S. Treasurys faced selling pressure, leading to higher yields. The 2-year Treasury yield increased by 3 basis points to 4.13%, indicating greater sensitivity to short-term rates, while the 30-year yield rose to 4.39% from 4.34%.
In commodities, WTI crude oil rebounded above $68 per barrel after a period of weakness, driven by demand dynamics and geopolitical issues. Precious metals gained traction, with gold up 1% to $2,661 per ounce, as safe-haven demand increased. Bitcoin remained around $97,000 as investors assessed macroeconomic and regulatory factors. The Cboe Volatility Index (VIX) climbed to a two-week high above 14, highlighting the demand for protection against market risks.
Important macroeconomic events are approaching, with the November Consumer Price Index (CPI) report set for December 11, followed by the Federal Open Market Committee (FOMC) meeting on December 18.
Our analysis indicates that the Federal Reserve will maintain its dovish stance and continue its rate-cutting cycle. A more measured approach to rate cuts could positively impact risk assets by extending the easing cycle and preserving the "Fed put," which provides implicit market support through accommodative monetary policy. This prolonged dovish policy would cushion equities, foster risk-on sentiment, and bolster investor confidence. President Trump plans to keep Federal Reserve Chair Jerome Powell, signaling continuity in policy.
Bottom Line:
On 09/13/2024, the SPY and QQQ ETFs, and the IWM ETF on 09/16/2024 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. 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.
Cycle Pivot Dates:
Our upcoming pivot dates are slated for Thursday, December 5, 2024, and Friday, December 13, 2024. Additionally, our next cyclical pivot, projected for January 6, 2025, is anticipated to mark a significant market peak. However, we remain disciplined in awaiting confirmation from our algorithms to issue a sell signal. We adhere to the principle of refraining from attempting to time market tops or bottoms. Instead, our focus is on positioning for the next market move based on robust data-driven signals rather than speculative predictions. On November 8, 2024, our proprietary algorithm issued buy signals for both the S&P 500 Equal Weight ETF (RSP) and the Dow Jones Industrial Average ETF (DIA). This development indicates that all five major indexes are now aligned with buy alerts. Consequently, any potential pullbacks in these markets should be viewed as strategic buying opportunities for investors looking to capitalize on upward momentum. Our next key cycle pivot date falls on November 15, 2024, which is expected to serve as a primary inflection point.
