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Market Moves Yesterday
S&P 500 @ 6,032.38 ( ⬆️ 0.57%)
Nasdaq Composite @ 19,218.17 ( ⬆️ 0.83%)
Bitcoin @ $96,341.27 ( ⬆️ 0.08%)
Hey Scoopers,
Happy Monday! We hope you had a great Thanksgiving!
Here’s what we’re covering today 👇
👉 The S&P 500 touches a fresh record high
👉 Gold and silver lag in November
👉 Analysts bullish on strong earnings in 2025
So, let’s go 🚀
Market Wrap
Stock futures are little changed this morning as investors look toward the final month of trading in 2024. Trading in November was primarily centered on a postelection rally after President-elect Donald Trump emerged as the winner.
In November 2024:
The Dow Jones index gained 7.5%
The S&P 500 added 5.7%
The Nasdaq Composite index surged 6.2%
Tesla, seen as a big beneficiary under the incoming Trump administration, rallied 33% last month, surging past the $1 trillion market cap threshold.
Tesla CEO Elon Musk was a prominent backer and donor to Donald Trump. Notably, Trump appointed Musk to co-lead the so-called Department of Government Efficiency.
Elsewhere, the Russell 2000, the small-cap index gained over 10% last month as investors expect companies to benefit from potential tax rate cuts and lower interest rates.
According to the FedWatch tool, there is a 66% likelihood that the Federal Reserve will lower rates by 25 basis points at its policy meeting this month.
Investors will watch on Monday for economic data on manufacturing and construction spending. That comes ahead of a series of closely watched labor data due later in the week.
Trending Stocks 🔥
Chip equipment stocks - Shares of chip equipment companies such as Applied Materials, Lam Research, and KLA ticked higher on Friday on news that the Biden Administration is considering sanctions on sales of semiconductor equipment and AI memory chips to China that could be less strict than earlier proposals.
Robinhood - The brokerage platform gained pace in early-market trading after the U.S. Securities and Exchange Commission approved the creation of a 24-hour stock exchange, paving the way for round-the-clock trading.
Advance Auto Parts - The stock fell 7% after credit rating agency Moody’s downgraded the company’s senior unsecured debt to below investment grade.
Will the S&P 500 Continue to Rally in December?
According to Evercore ISI analyst Rich Ross, U.S. equities remain in the throes of a powerful year-end surge. Ross noted that stocks may rally further as investors who had bet against a continued rally are forced to cover their short positions.
The analyst emphasized that the advance is driven by “a pro-cyclical expansion of breadth across Small Caps, Consumer [stocks], Financials, Industrials, and Technology” during what is already the strongest time of the year for stocks.
Ross projects the S&P 500 index to touch 6,300 by the end of 2024, indicating a 32.1% gain. The benchmark also surged 24.2% in 2023.
Financial markets can become extreme at inflection points, and one wonders if such a point is approaching. The S&P 500 price-to-sales ratio is at a record high. Moreover, the U.S. market accounts for 66.7% of the MSCI All-Country World Index, which is also an all-time high.
It's interesting to note that the S&P 500 has not experienced a stock market correction (a pullback of 10% or more) in 2024.
Since 1928, the S&P 500 has averaged a correction once every 346 days, almost once a year. However, the market has been stronger in recent years, as half the yearly periods since 2000 haven’t had such a pullback.
Gold and Silver Prices Move Lower
Gold and silver prices are on track for their biggest monthly declines this year. Gold has slid more than 2% in November, marking its worst month since September 2023, when the metal fell more than 5%.
Silver dropped more than 4% last month, the most significant monthly loss since December 2023, when it tumbled more than 6%.
The VanEck Gold Miners ETF (GDX) posted its worst month since January as stocks connected to the metal bucked the broader market’s post-election rally. By comparison, the broad S&P 500 has popped more than 5% month to date.
Despite the pullback, the ETF is tracking to end 2024 higher by more than 20%, primarily due to strong commodity prices.
What Next for the S&P 500?
In Q3, average earnings growth for S&P 500 companies stood at 5.8% year over year. Given consensus estimates, earnings growth for Q4 is forecast at 12%, the highest growth rate in three years.
The S&P 500 index consists of 11 sectors, eight of which are expected to report earnings growth in Q4.
The top-performing sectors will be:
Financials ⬆️ 38.9% 💰
Communication Services ⬆️ 20.7% 📱
Information Technology ⬆️ 13.9% 💻
Utilities ⬆️ 12.9% ⚡️
Healthcare ⬆️ 12.6% 🩺
Consumer discretionary ⬆️ 12.5% 🛍
Banks, semiconductors, pharmaceuticals, interactive media, and retail companies will be the top contributors to Q4 earnings. Excluding these industries, earnings growth in Q4 is estimated to be much lower at 1.6%.
Notably, analysts expect double-digit earnings growth for the S&P 500 to continue through all four quarters of 2025. Here are the estimated earnings growth rates for 2025:
Q1: 12.7%
Q2: 12.1%
Q3: 15.7%
Q4: 17%
A broader market rally in 2025
Equity indices were driven towards fresh record highs in the first half of 2024, primarily by big tech companies.
For example, companies such as Nvidia, Microsoft, Alphabet, and Amazon contributed more than 50% of the S&P 500 gains in the first six months. Moreover, roughly 40% of companies in the flagship index were in the red.
Now, the Russell 2000 index has surged 20% since the start of July, which means it was largely rangebound in the first half of the year.
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DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.