Published December 6, 2024
The final month of the year has arrived. And with it, all of the reminders that December is typically one of the strongest months of the year for the stock market. As the chart below shows, that strength is even more prevalent in an election year as the post-election relief rally adds more fuel to the December effect.
While December overall shows strength, within the month there is a bit of up and down. The chart below from the Stock Trader’s Almanac displays the average moves within the month. This first week of December has played out that way with the broad market index generally moving higher. Later in the month, small cap stocks tend to take flight.
Market Update
Strength in Nasdaq companies powered stocks this week. Monday brought a +1% jump in the tech/consumer-heavy index when beleaguered computer company Super Micro stated that a review of its accounting did not support claims of its departed auditor Ernst & Young. Super Micro shares have been crushed by claims that its accounting books and senior management are duping investors. Stocks extended their gains with a +0.4% rise Tuesday. Weakness in semiconductor stocks hampered the rise with Intel falling -6% on the sudden departure of their CEO. The Nasdaq added another +1% Wednesday after software company Salesforce posted strong results. After lagging the first half of the year, the software sector has taken the baton from semiconductors to power the Nasdaq over the past six weeks. Stocks ticked -0.2% lower Thursday resting after a strong run. Major geopolitical news has had little effect on stocks this week. The martial law debacle in South Korea plus a no-confidence vote for the French government have had offsetting market moves with no noticeable impact to U.S. stocks. Also in the news, Fed Chair Powell reiterated the recent strength in U.S. economic data gives the Central Bank little reason to be aggressive in reducing interest rates. Nonetheless, investors continue to expect a rate reduction at this month’s Fed meeting. Friday brought the monthly jobs report and the expected rebound from November’s hurricane-impacted reading. However the report was weak enough for interest rates to tumble anew. That sent growth stocks further upward leaving the Nasdaq higher by another +0.8%. Consumer Discretionary stocks also performed exceptionally well this week with Amazon rising +9% to power the group.
Fresh strength in the Magnificent Seven tech/consumer stocks propelled stocks to new heights this week. The S&P 500 rose +0.87% while the Nasdaq added +3.28%. Small cap stocks stepped back by -1.22%.
Warm wishes and until next week.