Tech leads mixed week for stocks

Overall, US stocks picked up in December where they left off in November—by setting records—but this time certain areas of the market sat out the rally.

On Friday—just seven trading days after closing above 6,000 for the first time—the S&P 500 (SPX) traded just shy of 6,100 (intraday) and closed at a record high for the second-straight week:

The headline: Stocks extend post-election rebound.

The fine print: The SPX closed last Wednesday 6.7% above its November 4 close—its third-biggest 23-day rally of the year. But only three of the SPX’s 11 sectors posted net gains last week.

The number: 227,000, the higher-than-expected number of jobs the US economy added in November. Despite the labor market’s (continued) surprising strength, the odds of a Fed rate cut next week jumped from around 72% to above 85% after the number was released on Friday.¹

The move: Last Monday Intel (INTC) rallied 6% intraday following after news its CEO was stepping down. But the stock reversed to close lower on the day, and fell an additional 13% over the next three days.

The scorecard: The Nasdaq 100 (NDX) tech index was the notable gainer last week, while the Dow Jones Industrial Average (DJIA) and the small-cap Russell 200 (RUT) both lost ground:

Sector returns: The strongest S&P 500 sectors last week were consumer discretionary (+5.6%), communication services (+4%), and tech (+3.3%). The weakest sectors were energy (-4.5%), utilities (-3.9%), and materials (-3%).

Stock movers: Novocure (NVCR) +49% to $29.85 on Monday, Janux Therapeutics (JANX) +49% to $59.86 on Tuesday, Cross Country Healthcare (CCRN) +63% to $18.16 on Wednesday. On the downside, Quantum (QMCO) -28% to $12.49 on Monday, Children’s Place (PLCE) -24% to $12.25 on Tuesday, AudioEye (AEYE) -24% to $20.70 on Thursday.

Futures: January WTI crude oil (CLF5) closed Friday at $67.20, down $0.80 for the week. February gold (GCG5) ended a mostly rangebound week down $21.40 at $2,659.60. Week’s biggest gains: December ether (ETHZ4) +13.4%, January milk (DCF5) +6.5%. Week’s biggest declines: January natural gas (NGF5) -8.5%, December VIX (VXZ4) -3.2%.

This week features the final inflation numbers before next week’s Fed meeting:

●Monday: wholesale inventories
●Tuesday: NFIB Business Optimism Index, Productivity and Labor Costs
●Wednesday: Consumer Price Index (CPI)
●Thursday: Producer Price Index (PPI)
●Friday: import price index

This week’s earnings include:

●Monday: C3 AI (AI), Casey's General Stores (CASY), HealthEquity (HQY), MongoDB (MDB), Oracle (ORCL), Toll Brothers (TOL)
●Tuesday: AutoZone (AZO), Designer Brands (DBI), Ollie's Bargain Outlet (OLLI), Dave & Buster's (PLAY)
●Wednesday: Macy's (M), Rev Group (REVG), Adobe (ADBE), Nordson (NDSN), Oxford Industries (OXM)
●Thursday: Broadcom (AVGO), Costco (COST), RH Com (RH)
●Friday: Winnebago (WGO)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

While the prospect of deregulation under a Trump administration was arguably a factor in the stock market’s initial post-election surge, investors have also been concerned about the potential negative effects of increased tariffs. And as Morgan Stanley & Co. analysts note, the President Elect has not been shy about his plans to leverage this area of policy.²

However, the strategists also point out that talking about policy is one thing, and implementing it is quite another. In short, the tariffs and related policies ultimately deployed could be much different than what Trump’s recent messages would suggest. As they explain, there are plenty of examples from the first Trump term of actual policy, including tariffs on China and corporate tax rates, differing significantly from what the president said he wanted.

In other words, even if tariffs are a foregone conclusion, it’s still too early to know how closely they’ll mirror the incoming administration’s recent rhetoric.

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¹ CMEGroup.com. FedWatch Tool. 12/6/24.
² MorganStanley.com. What Investors Should Know About Trump’s Tariffs. 12/4/24.