Stock Market Update Wednesday December 4, 2024 S&P 500 and Nasdaq Hit Record Highs Amid Tech Surge; Fed’s Powell Signals Positive Engagement with Trump Administration
The S&P 500 and Nasdaq indices rallied to new record highs, fueled by robust gains in technology stocks. Market sentiment was buoyed by renewed optimism in the sector, as investors pivoted toward growth-oriented equities. The upward momentum reflected confidence in corporate earnings and resilience in the broader economy.
Federal Reserve Chair Jerome Powell expressed confidence in maintaining constructive relations with the Trump administration, alleviating concerns of potential policy conflicts. Powell’s remarks suggested a stable communication channel between the central bank and executive leadership, reinforcing market stability.
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The October JOLTS (Job Openings and Labor Turnover Survey) report exceeded market expectations, revealing job openings of 7.7 million, surpassing the anticipated 7.4 million. This marks a net increase of 72,000 job vacancies, suggesting that the labor market may exhibit greater resilience than previously thought. Investors have interpreted this development as a hawkish indicator, implying that the Federal Reserve may see less urgency for aggressive interest rate cuts, given that a robust labor market can sustain inflationary pressures.
However, our analysis indicates that the reported data may be distorted due to the impact of Hurricanes Milton and Helene, which affected labor reporting during the transition from September to October. These disruptions are likely to have skewed the October figures, and the underlying trend still points towards a potential softening in job openings. Nevertheless, equity markets are currently in a consolidation phase amidst a busy economic data calendar.
Important macro upcoming events include the ISM Services report scheduled for tomorrow, the jobs report due on Friday, the November Consumer Price Index next week, and the Federal Open Market Committee (FOMC) meeting on December 18th, all of which warrant close attention from market participants.
While the current pause in market momentum persists, December's seasonal strength offers a silver lining. Historically, when markets are up more than 10% year-to-date, December tends to be a strong month for equities. Additionally, in election years, December has consistently delivered positive returns.
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.
Bottom Line:
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.
Today's appointment of Paul Atkins as SEC Chair by President-elect Trump has sent ripples through the cryptocurrency markets, triggering a sharp upward movement. Atkins, a seasoned and influential GOP insider in financial regulation, is viewed favorably by market participants anticipating a regulatory environment more conducive to innovation and growth.
Bloomberg notes that Atkins' potential confirmation is expected to bring a regulatory shift characterized by easing stringent frameworks and imposing reduced penalties for compliance violations. Such a stance aligns with market-friendly deregulatory policies, fueling optimism among crypto investors and stakeholders. This regulatory pivot could potentially catalyze greater institutional participation and broader market adoption in the coming months.
Cryptocurrency markets appear to be pricing in these expectations, reflecting increased confidence in a more lenient oversight regime under Atkins’ leadership.
