The stock market posted a nice rally on Friday, with the Dow Jones Industrial Average rising .8%, the Standard & Poor’s 500 Index adding 1.3% and the NASDAQ Composite leading the way with a gain of 1.8%. Despite this daily gain which broke a 5-day losing streak for the S&P 500 and the NASDAQ, the major stock market averages still closed the holiday-shortened week lower.
For the week in total – the Dow lost .6% to 42,732 – the S&P 500 dropped .5% to 5,942 (having now posted its third weekly loss out of the last four) – the NASDAQ Composite fell .5% to 19,622. So the negative price action in the market left investors who were waiting and watching for the Santa Claus Rally disappointed, as the rally never materialized. Recall the Santa Clause Rally is the market’s historically positive performance during the final five trading days of the year and the first two trading days of January.
Market volume will likely pick up in the week ahead as many money managers and market participants return from typical year-end vacations. Investors will get a look at the first big economic number of the year, when the Jobs Report is released this Friday morning. Expectations are the U.S. Department of Labor will report the economy added 155,000 jobs last month with the unemployment rate coming in at 4.2%. Investors are hoping for a Goldilocks type of number, not too hot that it increases worry about inflation and reduces expectations for interest rate cuts by the Federal Reserve, and not too cold that it indicates a weakening economy.
After that, get ready for another earnings season! For the fourth quarter of 2024, the estimated year-over-year earnings growth rate for the Standard & Poor’s 500 Index is 11.9%, if that is the actual growth rate for the quarter, it will mark the highest (year-over-year) earnings growth reported by the index since the fourth quarter of 2021, according to FactSet. Also, at play for the upcoming weeks, investors will be gauging how things look for tax cuts and deregulation during the next administration. Expectations for market friendly policies have supported the recent overall market advance.
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All the best – Southport Station Financial Management, LLC