1.
The Fed's 'pivot' brought market uncertainty to the forefront
2024-12-19 18:14:56 by Josh Schafer from Yahoo FinanceMarkets sold off on Wednesday as Federal Reserve Chair Jerome Powell explained why the central bank is expecting to cut interest rates at a slower pace than it had previously expected.
Investment strategists said that a hawkish shift by the Fed from a clear easing bias to one with more uncertainty over when and if rates will be lowered again in 2025 likely drove the negative sentiment.
Piper Sandler chief investment strategist Michael Kantrowitz told Yahoo Finance the Fed's "hawkish tone" was an "extrapolation" of recent moves in the market. Since the start of December, few stocks had been contributing to the S&P 500's (^GSPC) gains as markets had begun pricing in the prospects of higher interest rates and sticky inflation for most of December.
"I kind of think of this as a bit of a reset from, certainly, where expectations have been over the last couple of quarters," he said. "I would almost describe this as a bit of a light pivot from Powell."
With investors growing increasingly bullish on stocks since Donald Trump's election win, the "light pivot" from Powell, who highlighted many of the prevailing market fears of the past month surrounding higher rates and sticky inflation, was enough to jolt a reality check into a market that's been steadily rising throughout 2024.
"The hawkish turn, plus the fact that we're starting to get more dissent [among officials] now, that uncertainty doesn't really bode well, especially when you're heading into a year where there's just this dramatic policy uncertainty around inflation, but also the labor market," Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance.
He added that "you have really euphoric, sometimes somewhat exuberant sentiment, and then a negative catalyst comes along to tip the market over. And that's exactly what the Fed meeting was."
But largely, bullish investors don't think Wednesday's Fed meeting was a complete narrative shifter for market in the coming year. Gordon pointed to Powell's positive outlook for US economy as a "healthy backdrop" for stocks even if 2025 doesn't bring as many interest rate cuts as investors would have liked. Markets appeared to show signs of this sentiment on Thursday as stocks attempted to stage a rebound from Wednesday's brutal sell-off.
"Equity markets were clearly disappointed by Powell’s comments, but nothing he said fundamentally alters the bull case going into next year," DataTrek Research co-founder Nicholas Colas wrote in a note to clients on Wednesday night. "In the end, we may see fewer (or even no) rate cuts, but that’s because the US economy continues to grow and create marginal inflation as a byproduct."
While it may not have shaken the bull case for stocks in 2025, Wednesday's market action did serve as a teaser for what strategists believe could be a more volatile investing environment in 2025.
The Fed's Summary of Economic Projections (SEP) laid out a clear case for why the central bank would project just two rate cuts for 2025 versus the four it forecast in September. Officials marked up their projections for core inflation and economic growth next year while lowering their forecast for the unemployment rate in 2025.
But when describing the Fed's thinking, Powell did little to calm investor fears about the unknowns headed into 2025.
He used some version of the word "uncertain" the greatest number of times seen in a Fed press conference in 2024. He said there was higher uncertainty about inflation. He didn't outright decline the possibility of an interest rate hike next year. And he even admitted that some officials have started accounting for "policy uncertainty" from the Trump administration in their forecasts.
Given the unclear nature of those polices, this only further muddles the outlook and provides further support for the Fed's caution cutting rates in 2025.
"It's kind of common-sense thinking that when the path is uncertain, you go a little bit slower," Powell said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down."
At large, this points to further data dependency from the Fed in 2025, Gordon said.
"There is a degree of just more elevated uncertainty and maybe trepidation because the Fed is going to have to be in this reactive position," Gordon said. "It's not like they've gotten out of data dependence mode, but I think it puts them back into a hyper data dependence mode where every single jobs report and every single inflation report now is going to be scrutinized."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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2.
Big Tech is dominating the market once again — and that's probably just fine: Morning Brief
2024-12-18 11:00:40 by Jared Blikre from Yahoo FinanceThis is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
December is shaping up to be a tale of two markets.
On the one hand, the Dow (^DJI) just suffered its worst day in a month, capping a nine-day losing streak — its longest since 1978. Meanwhile, the Nasdaq Composite (^IXIC) notched six record highs this month, including one on Monday.
Investors can thank the $1.2 trillion worth of value that was added this month to the "Magnificent Seven" stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA).
Since the election, their market capitalization has surged by $1.8 trillion, led by Tesla's stunning $680 billion gain. Even more remarkable: This rally comes despite Nvidia shedding $200 billion over the same period.
But investor concerns about the narrowing rally are nothing new. Since this bull market began two years ago, the S&P 500 has tacked on $22 trillion in market capitalization, of which the Mag Seven stocks have contributed a cool $10 trillion, or 45%.
Each time the Mag Seven shows its dominance in the market, headlines trumpet comparisons to the late 1990s dot-com bubble, implying doom. But each time in this rally, other areas of the market have picked up and asserted themselves — while the tech stocks themselves have continued to do well.
Even when the Mag Seven index itself fell into a bear market in July, the damage to the S&P 500 was limited to a 9% drop. At the time, utilities, real estate, and consumer staples cushioned the fall — a classic case of "defensive" sectors earning their moniker.
As the godfather of technical analysis, Ralph Acampora, is fond of saying, "Rotation is the lifeblood of bull markets."
But when massive amounts of cash on the sidelines are being tapped, that can indicate Keynes's animal spirits at work. And BofA just reported the biggest drop in cash allocation since April 2001, a sign of "super-bullish sentiment."
Amid the uber-risk-on sentiment, cash is disappearing from portfolios at a record pace. The latest reading shows the allocation to cash by fund managers dropping to net 14% underweight — the lowest level since at least 2011 and the sharpest decline in five years.
And that level of sentiment is the proverbial fly in the ointment. BofA ominously highlights prior periods when cash allocation dropped to a similar degree: the first quarter of 2002, in the midst of a nasty bear market that would wipe 50% off the S&P 500, and February 2011, just prior to a near-20% drop in the index.
As the analysts wrote, "previous lows in cash allocation coincided with big tops in risk assets."
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3.
Why the 'Magnificent 7' rally could be a 'defensive' move
2024-12-17 20:41:47 by Josh Schafer from Yahoo FinanceDecember’s market action has been all about a rally from several members of the "Magnificent Seven" tech stocks.
Tesla (TSLA), Alphabet (GOOGL, GOOG), Amazon (AMZN), and Apple (AAPL) all hit fresh record highs on Monday. Even on a day like Tuesday, where all three major indexes were in the red, the Roundhill Magnificent Seven ETF (MAGS) hit a record high.
While each individual stock has its own potential story working for it — like Tesla CEO Elon Musk's ties with Donald Trump sparking a post-election rally — market strategists believe there is also a broader theme at play: The Magnificent Seven have become a place to hide when the direction of the macro narrative becomes uncertain.
"When you get concerned about other things at work in the market and the economy, the Mag Seven actually have this potential to be a 'defensive,'" Citi head of US equity strategy Scott Chronert said.
The large-cap bias among investors has come as markets expect the Federal Reserve to cut interest rates less than previously anticipated over the next year amid signs of sticky inflation and solid economic growth.
As of Tuesday, markets were pricing in two interest rate cuts for 2025, one fewer than markets projected prior to the presidential election on Nov. 5 and a far cry from the four that Federal Reserve officials initially favored in their most recent Summary of Economic Projections release in September.
Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance that when you consider the market is pricing in fewer interest rate cuts, a Magnificent Seven rally "isn't a coincidence."
"If rates are going to stay a little bit more elevated for a little bit longer than the consensus expected, then companies who have a net benefit from higher rates probably do well in that scenario," Gordon said while noting that the Magnificent Seven stocks fit that description.
Gordon pointed out that the Magnificent Seven, as well as other large-cap companies, fit the bill for a flight to safety amid rate uncertainty because they have significant cash on their balance sheets and strong quarterly cash flow. As Truist co-chief investment officer Keith Lerner told Yahoo Finance's Seana Smith back in April, this likely protects Big Tech from being exposed to high borrowing costs that could persist if the Fed pauses interest rate cuts.
Roundhill Investments CEO Dave Mazza believes they're seeing investors pile back into Roundhill's Magnificent Seven ETF because these companies are a way to play both offense and defense amid market uncertainty.
"We saw huge gains post the election, definitely broad-based [across the market]," Mazza told Yahoo Finance. "And now people are reassessing and saying, hey, what companies are actually going to be able to kind of power through whatever we see out of the economy and whatever we see out of the Trump administration?"
Mazza reasons the Magnificent Seven could fit this bill given their "impressive operating leverage" that helps them grow profits quickly.
Zoom out, and the fundamental story remains intact for the Magnificent Seven too. While many have highlighted the earnings growth rate is expected to slow for the group in the year ahead, it is still expected to grow earnings at a faster rate over the next year than the rest of the 493 companies in the S&P 500 and has shown more consistency in earnings growth topping Wall Street's expectations in recent quarters.
"We use the phrase growth as defensive periodically and that's what's going on here," Chronert said. "So essentially, that's what we are looking at is near term, let's call it one, probably two, years of visibility that's pretty good for these companies."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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4.
Bitcoin Price Hits Fresh Record. How Fed Could Hamper Crypto.
2024-12-16 15:34:00 by Elsa Ohlen from Barrons.comBitcoin price hit an all-time high of $106,496 early Monday, reaping further gains from President-elect Donald Trump’s plans to deregulate cryptos and create a national strategic reserve of Bitcoin. The slight drop could be due to fears the Federal Reserve will adopt a more hawkish tone as the Federal Open Market Committee meets next on Dec. 18. Cryptocurrencies are generally considered a risky investment and tend to rise when the Fed cuts rates.
5.
Want to Invest in the Nasdaq? This ETF Is a Great Option Heading Into the New Year
2024-12-15 17:30:00 by Stefon Walters, The Motley Fool from Motley FoolWhen people refer to investing in the Nasdaq, it could mean a few different things.
For some, it means investing in the Nasdaq Composite, one of the U.S. stock market's main three indexes that includes virtually every stock on the Nasdaq (NASDAQ: NDAQ) stock exchange. For others, it means investing in the Nasdaq-100, a subset of the Nasdaq Composite, tracking the 100 largest non-financial stocks in the index.
Neither option is outright better than the other; it's all about preference. The Nasdaq Composite is much larger and more diversified (over 2,500 companies), while the Nasdaq-100 is concentrated in the biggest names.
Looking ahead to the new year, a great option for investors is a Nasdaq-100 exchange-traded fund (ETF), such as the Invesco QQQ Trust (NASDAQ: QQQ). It's one of the stock market's most popular ETFs, and it has delivered excellent returns going back many years.
There are many growth opportunities for the ETF's top holdings
This ETF is market-cap-weighted, so larger companies make up more of the fund than smaller ones. This has led to a handful of megacap tech stocks leading the charge. Below are the ETF's top 10 holdings:
| Company | Percentage of the ETF |
|---|---|
| Apple | 8.96% |
| Nvidia | 7.88% |
| Microsoft | 7.83% |
| Amazon | 5.62% |
| Meta Platforms | 5.12% |
| Broadcom | 4.89% |
| Tesla | 4.61% |
| Costco Wholesale | 2.70% |
| Alphabet (Class A) | 2.58% |
| Alphabet (Class C) | 2.48% |
Data source: Invesco. Percentages as of Dec. 10.
With 10 companies making up over 52% of the ETF, it's far from the diversification poster child. However, these companies have great growth prospects heading into 2025 (and beyond). It all begins with a few megatrends with lots of momentum: artificial intelligence (AI), cloud computing, and electric vehicles (EV).
AI may not be an industry in itself, but it seems to be well on the way to transforming many industries. Between graphics processing units (GPUs), data centers, semiconductors, machine learning, and other tools needed to train AI, the companies listed above are at the forefront of that charge.
Cloud computing remains in the early stages of adoption, but Amazon, Microsoft, and Alphabet currently lead the market with 31%, 20%, and 11% market shares, respectively.
The global EV market was valued at just over $500 billion in 2023 and is expected to reach nearly $1.9 trillion by 2032, representing a compound annual growth rate of just under 14%. While Tesla is the only EV maker in the top 10, it relies on others for hardware and software components.
This ETF has a history of market-beating performance
The Invesco QQQ Trust has been on a roll since it hit the stock market in Mar. 1999. In those 25 years, it has returned over 930% (as of Dec. 12) and averaged around 9.5% annual returns -- both figures beat out the S&P 500. Every $1,000 invested in the ETF from its inception would be worth over $10,300 now.
You can't use historical performance to predict future performance, but it's encouraging knowing the ETF has held its own through some rough periods in the market, including the dot-com bubble burst, the Great Recession, and COVID-19 pandemic.
It's also encouraging to know you'll be able to keep many of your gains to yourself. This ETF's expense ratio is 0.2%, meaning you'll pay $2 for every $1,000 invested annually. It's not as cheap as some S&P 500 ETFs (like this Vanguard option at 0.03%), but it remains reasonable overall.
The cost might not be the first detail you consider when choosing an ETF, but slight differences could add up to thousands of dollars over the long haul. This ETF is a relatively cheap option with proven results and huge growth opportunities ahead for its core holdings.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Stefon Walters has positions in Apple and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom and Nasdaq and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Want to Invest in the Nasdaq? This ETF Is a Great Option Heading Into the New Year was originally published by The Motley Fool
6.
The final Fed meeting of 2024 awaits: What to know this week
2024-12-15 12:45:03 by Josh Schafer from Yahoo FinanceThe stock market rally has stalled as the final Federal Reserve meeting of the year approaches.
In the past week, the Nasdaq Composite (^IXIC) was the only of the three major indexes to post a weekly gain, closing up more than 0.3%. Meanwhile, the S&P 500 (^GSPC) fell about 0.6%, while a decline in healthcare stocks weighed on the Dow Jones Industrial Average (^DJI), which slid nearly 2%. The Dow has now fallen for seven straight sessions, its worst stretch since February 2020.
Investors are set to receive a jam-packed week of economic news, highlighted by the Fed's next interest rate decision on Dec. 18. Markets widely expect the Fed to cut interest rates by 25 basis points, and investors are likely to focus on what Fed Chair Jerome Powell says about the path forward in 2025 during his press conference at 2:30 p.m. ET on Wednesday.
Updates on November retail sales, the Personal Consumption Expenditures (PCE) index — the Fed's preferred inflation gauge — and activity in the services and manufacturing sectors are also on the economic calendar.
In corporate news, quarterly results from Micron (MU), Nike (NKE), FedEx (FDX) and Carnival Corporation (CCL) are expected.
A cut, then what?
Entering Wednesday's Federal Reserve meeting, markets are pricing in a roughly 97% chance the Federal Reserve cuts interest rates by 25 basis points, per the CME FedWatch tool. But given recent data that showed the US economy is growing at a solid pace, the labor market isn't rapidly cooling, and inflation's path to the Fed's 2% goal is proving bumpy, many expect the Fed will cut rates by less than initially thought in 2025.
Key to watch is the Fed's latest Summary of Economic Projections (SEP). That includes its "dot plot," which maps out policymakers' expectations for where interest rates could be headed in the future, as well as commentary from Powell during his press conference.
Read more: What experts say about the possibility of additional rate cuts
When the Fed last issued its dot plot in September, the median forecast was for the fed funds rate to end 2025 in a range of 3.25% to 3.5%. Instead of the four rate cuts in 2024 projected back in September, markets are pricing in just two rate cuts for next year, per Bloomberg data.
"We think that the economic forecasts will show better growth and firmer inflation this year and that the median interest rate forecast dots will be revised to show three cuts next year instead of four, as in the September dots," JPMorgan chief US economist Michael Feroli wrote in a note to clients.
Bank of America US economist Aditya Bhave wrote in a note to clients that Powell is likely to point to a "slower pace" of cuts during his press conference including a pause in the rate-cutting cycle in January.
Retail reading
Prior to the Fed's decision on Wednesday, officials will get a fresh reading on the state of the consumer with the November retail sales report. Economists estimate retail sales increased 0.5% over the prior month during October. The control group of retail sales — which excludes several volatile categories like gasoline and feeds directly into the gross domestic product (GDP) — is also expected to have risen by 0.4%.
Bank of America's US economics team thinks this report will reflect a strong start to the holiday shopping period.
"Online retail spending was particularly strong around the Thanksgiving period," the team wrote in a note to clients on Friday. "In fact, holiday spending is running ahead of cumulative 2023 levels despite a delayed Thanksgiving. Hence, we expect a robust retail sales report for Nov, with retail sales ex-autos and the core control category coming in at 0.5% m/m."
Inflation update
Last week, readings of both the Consumer Price Index (CPI) and producer price index (PPI) showed signs of inflation making little progress toward the Fed's 2% target. But many economists argued that there were promising signs within the details of those reports that should lead to a less concerning reading of the Fed's preferred inflation gauge next Friday.
Economists expect annual "core" PCE — which excludes the volatile categories of food and energy — to have clocked in at 2.9% in November, up from the 2.8% seen in October. But over the prior month, economists project "core" PCE at 0.2%, lower than the 0.3% increase seen in October.
"In our view, November data on inflation should provide comfort that the disinflation process remains in place," Morgan Stanley chief US economist Michael Gapen wrote in a note to clients on Friday. "Although headline and core CPI came in slightly above our expectation ... we found the details of the report favorable for thinking inflation would continue to move lower in the near-term."
'Bad breadth'
For 10 straight trading days more stocks have declined than risen in the S&P 500, the longest such stretch since September 2001. Still, over that time period which spans all of December thus far, the S&P 500 is up about 0.3%. Meanwhile, the equal-weighted version of the S&P 500 (^SPXEW), which isn't overly influenced by movements in large stocks within the index, is down more than 3%.
"Savvy traders should at least pay attention to some of the warning signs about the overall health of the market. So far, it is the sniffles or just a case of bad breadth," Interactive Brokers chief strategist Steve Sosnick wrote in a note to clients on Thursday. "But there are some symptoms that can lead to something more meaningful if left unattended."
To Sosnick's point, for now, a rally in the largest tech stocks in the market is keeping the benchmark index afloat. On Wednesday the Nasdaq Composite closed above 20,000 for the first time ever as Alphabet (GOOG, GOOGL), Tesla (TSLA), Meta (META), and Amazon (AMZN) all surged to record highs
Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance that this market action comes as investors have been digesting sticky inflation prints, and the possibility of the Fed cutting interest rates less than initially, though next year isn't a "surprise."
"If rates are going to stay a little bit more elevated for a little bit longer than the consensus expected, then companies who have a net benefit from higher rates probably do well in that scenario," Gordon said while noting that the "Magnificent Seven" stocks fit that description.
Weekly calendar
Monday
Economic data: Empire manufacturing activity, December (5.8 expected, 31.2prior); S&P Global US manufacturing PMI, December preliminary (49.7 prior); S&P Global US services PMI, December preliminary (56.1 prior); S&P Global US composite PMI, December preliminary (54.9 prior)
Earnings: No notable earnings.
Tuesday
Economic data: Retail sales month-over-month, November (+0.5% expected, +0.4% prior) Retail sales excluding auto and gas month-over-month, November (+0.5% expected, +0.1% prior); Retail sales control group month-over-month, November (+0.4% expected, -0.1% prior); Industrial production, month-over-month, November (0.2% expected, -0.3% prior); NAHB housing market index, December (46 expected, 46 prior)
Earnings: No notable earnings.
Wednesday
Economic data: Building permits month-over-month, November preliminary (1% expected, -0.4% prior); Housing starts month-over-month, November (2.5% expected, -3.1% prior); FOMC rate decision (4.25% to 4.5% expected, 4.5% to 4.75% prior)
Earnings: Birkenstock (BIRK), General Mills (GIS), Lennar (LEN), Micron (MU)
Thursday
Economic data: GDP annualized quarter-over-quarter, third quarter third estimate, (2.8% expected, 2.8% prior); Core PCE quarter-over-quarter, third quarter third estimate (2.1% prior); Philadelphia business outlook, December (2.2 expected, -5.5 prior); Initial jobless claims, week ending Dec. 14 (242,000 expected); Leading index, November (-0.1% expected, -0.4% prior); Existing home sales month-over-month, November (3.3% expected, 3.4% prior)
Earnings: Accenture (ACN), BlackBerry (BB), CarMax (KMX), Conagra (CAG), Darden Restaurants (DRI), FactSet (FDS), FedEx (FDX), Lamb Weston (LW), Nike (NKE)
Friday
Economic data: Personal income, November (+0.4% expected, +0.6% prior); Personal spending, November (+0.5% expected, +0.4% prior); PCE index month-over-month, November (+0.2% expected, +0.2% prior); PCE Index year-over-year, November (+2.5% expected, +2.3% prior); Core PCE Index month-over-month, November (+0.2% expected, 0.3% prior); Core PCE Index, year-over-year, November (+2.9% expected, 2.8% prior); University of Michigan consumer sentiment index, December final (74 prior); Kansas City Fed services activity, December (9 prior)
Earnings: Carnival Corporation (CCL), Winnebago (WGO)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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7.
Annual Changes to the Nasdaq-100 Index®
2024-12-14 01:00:00 by Nasdaq, Inc. from GlobeNewswire
NEW YORK, Dec. 13, 2024 (GLOBE NEWSWIRE) -- Nasdaq (Nasdaq: NDAQ) today announced the results of the annual reconstitution of the Nasdaq-100 Index® (Nasdaq: NDX®), which will become effective prior to market open on Monday, December 23, 2024.
The following three companies will be added to the Index: Palantir Technologies Inc. (Nasdaq: PLTR), MicroStrategy Incorporated (Nasdaq: MSTR), and Axon Enterprise, Inc. (Nasdaq: AXON).
The Nasdaq-100 Index® is composed of 100 of the largest non-financial companies1 listed on The Nasdaq Stock Market® and dates to January 1985 – nearly 40 years ago –when it was launched along with the Nasdaq Financial-100™ Index, which is comprised of 100 of the largest financial stocks on Nasdaq® These indexes act as benchmarks for financial products such as options, futures, and funds. The Nasdaq-100® is reconstituted each year in December, timed to coincide with the quadruple witch expiration Friday of the quarter.
The Nasdaq-100 Index® is the basis of the Invesco QQQ Trust (Nasdaq: QQQ) which aims to provide investment results that, before expenses, correspond with the Nasdaq-100 Index® performance. In addition, options, futures and structured products based on the Nasdaq-100 Index® and the Invesco QQQ Trust trade on various exchanges.
As a result of the reconstitution, the following three companies will be removed from the Index: Illumina, Inc. (Nasdaq: ILMN), Super Micro Computer, Inc. (Nasdaq: SMCI), and Moderna, Inc. (Nasdaq: MRNA).
Information
For information about the three companies to be added to the Nasdaq-100 Index®, please visit the following respective company websites:
Palantir Technologies Inc. – https://www.palantir.com/
MicroStrategy Incorporated – https://www.microstrategy.com/
Axon Enterprise, Inc. – https://www.axon.com/
About Nasdaq Global Indexes
Nasdaq Global Indexes has been creating innovative, market-leading, transparent indexes since 1971. Today, our index offering spans geographies and asset classes and includes diverse. We continuously offer new opportunities for financial product sponsors across a wide spectrum of investable products and for asset managers to measure risk and performance. Nasdaq also provides exchange listing, custom index, and design solutions to financial organizations worldwide.
_______________
1 As outlined in the Nasdaq-100 Index® Methodology
About Nasdaq
Nasdaq (Nasdaq: NDAQ) is a leading global technology company serving corporate clients, investment managers, banks, brokers, and exchange operators as they navigate and interact with the global capital markets and the broader financial system. We aspire to deliver world-leading platforms that improve the liquidity, transparency, and integrity of the global economy. Our diverse offering of data, analytics, software, exchange capabilities, and client-centric services enables clients to optimize and execute their business vision with confidence. To learn more about the company, technology solutions, and career opportunities, visit us on LinkedIn, on X, or at www.nasdaq.com.
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular financial product or an overall investment strategy. Neither The Nasdaq OMX Group, Inc. nor any of its affiliates makes any recommendation to buy or sell any financial product or any representation about the financial condition of any company or fund. Statements regarding Nasdaq’s proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.
- NDAQG -
| Media Relations Contact | Investor Relations Contact | ||
| Name: Jennifer Lawson Email: Jennifer.Lawson@nasdaq.com |
Name: Index Client Services Email: indexservices@nasdaq.com |
||
8.
2 Growth ETFs to Buy With $200 and Hold Forever
2024-12-13 10:25:00 by Geoffrey Seiler, The Motley Fool from Motley FoolIn general, there are two main types of investing: value investing and growth investing. The former centers around finding out-of-favor stocks trading below their intrinsic value, while the latter is focused on finding stocks with strong growth potential.
When it comes to exchange-traded funds (ETFs), I prefer index ETFs that focus on growth stocks. The reasons are simple: First, index funds tend to have the lowest expenses. High expenses, even something as seemingly low as 1%, will eat into returns over time.
Second, market-weighted indexes tend to outperform actively managed funds by letting their mega-winners run and become larger parts of the index. These mega-winners generally tend to be classified as growth stocks, and nothing can send a stock higher than earnings and revenue growth.
Just look at how Nvidia's huge revenue and earnings growth the past few years catapulted it to become one of the largest companies in the world.
When scanning the S&P 500 index's top 10 holdings, eight are classified as growth stocks by the Center for Research in Security Prices (CRSP), which tracks the history of stock prices. And many of the largest value stocks were once growth stocks.
With that, let's look at two strong growth-focused ETFs to buy and hold for a very long time.
Vanguard Growth Index Fund
For investors who want to invest in an S&P Index ETF, but without the value stocks, the Vanguard Growth Index Fund ETF (NYSEMKT: VUG) is a great option. It tracks the CRSP U.S. Large Cap Growth Index, which is essentially the growth side of the S&P.
Like most Vanguard ETFs, it has a super-low expense ratio: just 0.04%. So investors get to replicate the index's returns nearly perfectly. Meanwhile, the fund is heavily weighted toward the technology sector, at 58% of the portfolio, while consumer discretionary stocks make up another 18%.
The fund has been a great performer over time, with an average annual return of 15.6% over the past decade as of the end of November. That equals a 326% cumulative return, meaning a $200 investment 10 years ago would now be worth over $850.
The ETF's returns have been even stronger in recent years, with an average annual return of 31.8% the past three years and 37.7% over the past year as of the end of November.
Apple, Nvidia, Microsoft, and Amazon currently make up more than 39% of the fund, so as long as these companies continue to benefit from the artificial intelligence boom, the ETF should continue to be a nice winner.
Invesco QQQ ETF
Another great growth-focused index ETF is the Invesco QQQ Trust (NASDAQ: QQQ). It tracks the Nasdaq 100 index, which consists of the 100 largest nonfinancial companies that trade on the Nasdaq Stock Exchange.
The ETF has a bit higher expense ratio than the Vanguard Growth Index, but it is still low at 0.2%. The fund is even more weighted toward technology, with about 60% of its holdings in the sector. Consumer discretionary stocks make up another 18% of the ETF.
Apple, Nvidia, Microsoft, and Amazon also make up its top four holdings, but at a slightly lower percentage of the portfolio at about 30.5%, versus the 39% in the Vanguard fund.
The Invesco QQQ ETF has been a very strong performer, with an average annual return of 18.3% over the past 10 years, as of the end of September. Taking it through November, its cumulative return is 421.5% -- meaning a $200 investment would now be worth $1,043. The ETF is up 32% over the past year, through November.
Since its inception in March 1999 through September 2024, the ETF has a 1,025.2% return compared to 619.3% for the S&P 500. That's an impressive feat.
Start with $200 and add more
The Vanguard Growth ETF and Invesco QQQ ETF are both great growth investments. That said, one of the keys with ETFs is to be consistent with your investing.
So even if you start with a small amount, such as $200, you should try to consistently buy into these ETFs through a dollar-cost averaging strategy. This could mean $200 every week or every month, but the key is continuing to invest in good markets and bad.
Over a long period of time, history says you'll be quite happy with the results and a lot wealthier than when you started.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $853,765!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 9, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Geoffrey Seiler has positions in Invesco QQQ Trust. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
2 Growth ETFs to Buy With $200 and Hold Forever was originally published by The Motley Fool
9.
Billionaires Are Buying a Supercharged Index Fund That Includes Nvidia, Tesla, and Other "Magnificent Seven" Stocks
2024-12-13 08:30:00 by Trevor Jennewine, The Motley Fool from Motley Fool
The S&P 500 (SNPINDEX: ^GSPC) has advanced 27% year to date due to enthusiasm about artificial intelligence, and the "Magnificent Seven" stocks have contributed more than half of those gains. The hedge fund billionaires listed below bought shares of the Invesco QQQ Trust (NASDAQ: QQQ) during the third quarter, a supercharged index fund that offers heavy exposure to those seven stocks.
- Paul Tudor Jones of Tudor Investment purchased 98,531 shares of the Invesco QQQ Trust, opening a new position. The index fund ranks among his top 20 holdings, excluding options contracts.
- Cliff Asness of AQR Capital Management bought 26,970 shares of the Invesco QQQ Trust, more than tripling his stake in the index fund.
- Israel Englander of Millennium Management bought 198,064 shares of the Invesco QQQ Trust, more than tripling his stake in the index fund.
Investors should never buy or sell a security simply because someone else did. Instead, they should always formulate an investment thesis before putting money into the market. Read on to learn more about the Invesco QQQ Trust.
The Invesco QQQ Trust is heavily invested in the Magnificent Seven stocks
The Invesco QQQ Trust measures the performance of the Nasdaq-100, an index that tracks the 100 largest non-financial companies on the Nasdaq Stock Exchange. The index fund is heavily invested in the information technology sector, and the Magnificent Seven stocks account for 45% of its weighted exposure.
The 10 largest holdings in the Invesco QQQ Trust are listed by weight below:
- Apple: 8.9%
- Nvidia: 7.8%
- Microsoft: 7.8%
- Amazon: 5.6%
- Meta Platforms: 5.1%
- Alphabet: 5.1%
- Broadcom: 4.9%
- Tesla: 4.6%
- Costco Wholesale: 2.7%
- Netflix: 2.4%
The Magnificent Seven are some of the most profitable businesses in the world. In aggregate, those seven companies reported a net profit margin of 23.5% in the most recent quarter. Comparatively, the other 493 companies in the S&P 500 reported a net profit margin of 9.2%.
Additionally, the Magnificent Seven are expected to report earnings growth of 36% this year and 21% next year. Comparatively, the other 493 companies in the S&P 500 are expected to report earnings growth of 3% this year and 13% next year. In short, while the Magnificent Seven command pricey valuations, they are also growing much faster than the average S&P 500 company.
Going forward, the Invesco QQQ Trust provides exposure to several important technologies that could create significant wealth for investors. That includes artificial intelligence, cloud computing, autonomous robots and vehicles, and quantum computing.
The Invesco QQQ Trust generated supercharged returns over the last decade
The S&P 500 is generally viewed as the best benchmark for the overall U.S. stock market due to its scope and diversity. The Invesco QQQ Trust has outperformed that benchmark during the last one year, three years, and five years. More impressive, the Invesco QQQ Trust doubled the return of the S&P 500 in the last decade , and tripled its return in the last two decades. as shown in the chart below.
| Time Period |
Invesco QQQ Trust Return |
S&P 500 Return |
|---|---|---|
| 1 Year |
35% |
32% |
| 3 Years |
33% |
29% |
| 5 Years |
160% |
94% |
| 10 Years |
412% |
200% |
| 20 Years |
1,230% |
412% |
Data source: YCharts. Returns shown are current as of December 11, 2024.
The downside of the Invesco QQQ Trust is volatility. The index fund has a three-year beta of 1.18, meaning it moved 118 basis points (1.18 percentage points) for every 100-basis-point movement in the S&P 500. That means good days tend to be better, but it also means bad days tend to be worse.
Consequently, the Invesco QQQ Trust would likely fall much more sharply than the S&P 500 during a stock market crash. Indeed, the S&P 500 declined 25% during the bear market that began in January 2022, but the Invesco QQQ Trust declined 36%.
The last item of consequence is the expense ratio. The Invesco QQQ Trust has an expense ratio of 0.2%, meaning investors will pay $20 per year on every $10,000 invested in the fund. That is below the industry average of 0.36%, according to Morningstar.
Here is the bottom line: Past performance is never a guarantee of future results, but the Invesco QQQ Trust has been a brilliant long-term investment. The fund has consistently outerperformed the S&P 500, and I think patient investors will see more of the same in the next decade. I see the catalyst for that outperformance as the growing popularity of artificial intelligence, robotics, and other technologies.
Should you invest $1,000 in Invesco QQQ Trust right now?
Before you buy stock in Invesco QQQ Trust, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Invesco QQQ Trust wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $853,765!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of December 9, 2024
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Costco Wholesale, Meta Platforms, Microsoft, Netflix, Nvidia, and Tesla. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
Billionaires Are Buying a Supercharged Index Fund That Includes Nvidia, Tesla, and Other "Magnificent Seven" Stocks was originally published by The Motley Fool
10.
Stocks will end 2025 lower due to sticky inflation, economic slowdown, Stifel predicts
2024-12-12 19:42:57 by Josh Schafer from Yahoo FinanceThe stock market will end 2025 lower than its current levels, according to Stifel chief investment strategist Barry Bannister.
Bannister sees sticky inflation prompting the Federal Reserve to hold interest rates high as economic growth weakens, serving as key catalysts to the eventual pullback in the stock market rally. Bannister sees the S&P 500 (^GSPC) ending 2025 in the mid 5,000s. As of Thursday afternoon, the S&P 500 was hovering just shy of an all-time high at about 6,070.
Among the more than 17 strategists tracked by Yahoo Finance who have listed 2025 year-end calls for the S&P 500, Bannister is the lone strategist to call for the benchmark index to fall in 2025. Still, he isn't alone in calling for a pullback in the second half of 2025. On Wednesday, Fundstrat head of research Tom Lee said he believes the S&P 500 will rally to 7,000 midway through the year before falling to 6,600.
"The environment does not appear conducive to continued equity mania, and we prefer more defensive sectors," Bannister wrote in a note to clients on Thursday. He added that slower economic growth would benefit "defensive value" sectors, including the Healthcare (XLV), Utilities (XLU), and Staples (XLP) sectors.
Bannister believes the Fed will cut interest rates by 25 basis points at each of its next two meetings before enacting a longer pause on rate cuts due to sticky inflation and "zero fiscal visibility."
To Bannister's point, recent data has shown inflation isn't falling rapidly to the Fed's 2% target. This has prompted economists to believe the Fed will likely cut interest rates less than initially hoped in 2025.
Strategists have argued how much the Fed cuts in 2025 isn't the key determinant of the equity market. Instead, they argue, the key is the US economic growth trajectory.
"The growth backdrop has been a key driver [of the stock market rally]," Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance. "So if you have still relatively sticky inflation, but if the economy's run rate is still relatively strong, which has been the case for most of this year, then I think the market can continue to do well."
Continued strong growth from the US economy has been a key driver behind many of the calls for the bull market to keep running in 2025. Wells Fargo's Christopher Harvey has said he believes the S&P 500 ends next year at 7,007 and has highlighted a "cyclical opportunity catalyzed by upward GDP revisions."
Bank of America Securities offered a similar take when calling for the S&P 500 to hit 6,600. BofA favors "GDP sensitive companies," with the firm recommending overweights on the Financials (XLF), Consumer Discretionary (XLY), Materials (XLB), Real Estate (XLRE), and Utilities (XLU) sectors.
"We like companies with healthy cash return prospects and a tether to the US economy: large cap Value stocks," Bofa's Savita Subramanian wrote.
As of Thursday, consensus expects the US economy to grow at an annualized rate of 2.1%, per Bloomberg data.
Bannister is more bearish: He sees GDP falling to about 1.5% in the second half of the year "as lower real wages (slowing wages combined with flat inflation) pressure consumption growth, while fixed investment and net exports also weaken."
RBC Capital Markets head of US equity strategy Lori Calvasina recently pointed out in her 2025 outlook why economic growth meeting or exceeding positive expectations could be crucial to the stock market rally. Dating back to 1947, GDP has grown between 1.1% and 2% five times. Stocks were higher just 40% in those years, with an average decline of 3.4%. Meanwhile, in years when GDP tracked between 2.1% and 3%, stocks were higher 70% of the time, with an average return of nearly 11%.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
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11.
Top Wall Street bull sees possibility of feverish stock rally fading in second half of 2025
2024-12-12 09:00:33 by Josh Schafer from Yahoo FinanceOne of Wall Street's most notorious bulls sees the rapid rally in the S&P 500 (^GSPC) adding another 16% to start 2025 before eventually cooling off to end the year.
Fundstrat head of research Tom Lee wrote in his 2025 outlook that a Fed rate-cutting cycle, White House policies that could boost corporate confidence, and earnings are among the factors that support further gains for the benchmark index next year.
But after reaching 7,000 by mid-year, Lee said historical data points to a weaker second half of the year. He eventually sees a pullback, with the S&P 500 ending 2025 at 6,600. Notably, that would still mark a roughly 9% increase from current levels. Lee's forecast falls roughly in line with the median forecast among strategists tracked by Yahoo Finance.
Lee's calls for solid but more muted returns next year come after back-to-back 20% gains for the S&P 500 in 2023 and 2024. (The benchmark is up over 27% so far this year.) In the past five instances of 20% rallies in consecutive years, the second half of the third year has been negative, per Lee's work.
"I'm not bearish about the year," Lee said in a 2025 outlook call with clients on Wednesday.
“It makes sense to think of this as two halves of a year," he added. "Because whenever you've booked 20% back-to-back gains, markets tend to do better in the first half of that third year, not in the second half."
Lee clarified that his call for a pullback is largely based on that historical pattern. And there is still a chance the market is higher than 7,000 at year-end amid an "unrelenting rise" — which, he said, would be driven by flows from risk-free areas of the market into stocks.
"I'm just saying I don't know what happens really in the second half yet," Lee said. "I think we're confident about the first half."
Lee noted that the correlation between stocks within the market is "falling to 20-year lows," creating an environment ripe for stock picking. He said he likes areas such as small caps, which he believes could benefit from deregulation and a boost in merger and acquisition activity under the new Trump administration.
Lee's outlook comes alongside a return in "animal spirits" coming into play. The popular call on the Street heading into 2025 has contributed to several high-flying forecasts, with Yardeni Research projecting the S&P 500 will end the year at 7,000.
Also among Lee's top calls is bitcoin (BTC-USD) reaching $250,000 per coin in 2025 as a "bitcoin halving" cycle and "friendlier" government regulations under the Trump administration spark demand.
While not listed as a base case, Lee said the key thing that could "go wrong" for stocks is US economic growth underperforming expectations. This could be driven by effective action from Elon Musk's "Department of Government Efficiency" limiting government spending and weighing on gross domestic product (GDP). Lee also lists the Trump administration's plans for tariffs as a potential GDP headwind.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
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12.
An 'unfamiliar' era for investors has arrived after a 20-year 'regime': Morning Brief
2024-12-11 11:04:01 by Jared Blikre from Yahoo FinanceThis is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
It's December, and markets have slowed to a familiar holiday cadence. Volume is predictably receding, and volatility barely stirs. Whispers of a "Santa Claus rally" are lulling investors into a fragile complacency.
Two catalysts threaten to upend the holiday detente. This morning's Consumer Price Index showed November 12-month inflation ticking up to 2.7% as core inflation, which strips out food and energy, is sticked stubbornly to 3.3%.
Meanwhile, next week's Federal Reserve meeting looms large, with policymakers debating whether to cut rates again — potentially stoking 2025 inflation — or hold firm.
Together, these forces underscore what RSM chief economist Joe Brusuelas describes as a "regime change" in economics.
“Twenty years of subdued inflation, low interest rates, a reduced cost of capital and financial leverage have given way to a new regime,” wrote Brusuelas in a note to investors, adding, "For many investors and firm managers, this era is unfamiliar."
Brusuelas recently joined Yahoo Finance's Stocks in Translation podcast to expand on his regime change thinking, which he notes is really about the post-pandemic economy.
"[The pandemic] wiped the slates clean," he said, ticking off a laundry list of changes that the shutdown and rejiggering of global supply chains have produced. Critically, when those supply chains reopened, they were vastly different, if not entirely new, he argued.
"We're in a very different cost environment," he said, "and we're going to get a very different set of politics." Thinking ahead, the American people and industry will likely face fewer regulations, higher tariffs, lower taxes, stricter immigration, and a ballooning trade deficit.
And while politicians typically jawbone a strong dollar, that strength tends to frustrate attempts to narrow a widening trade deficit — a key pillar of the incoming administration.
All of this sets the stage for higher interest rates and higher inflation, argues Brusuelas. Even if price increases slow or halt, they're not going to deflate back to pre-pandemic prices. "Those prices have gone up," he said. "They are not ever going to reset to 2019 levels."
While the cost of doing business might be heading higher, elevated interest rates could actually be a boon for economic stability.
Brusuelas argues that the US economy will be more resilient and less prone to bubble forces that arise from leverage fueled by cheap money. The gaps between winners and losers will also be more pronounced — both at the individual and business level. All of which, Brusuelas notes, introduces the possibility of "a very novel set of opportunities for forward-looking investors."
Where should investors look for clues as to how this all unfolds?
Brusuelas cites history, but with a rhyme. "The stock market has been the barometer of the first Trump administration. So the bond market's likely to be [that of] the second."
On Yahoo Finance's podcast Stocks in Translation, Yahoo Finance editor Jared Blikre cuts through the market mayhem, noisy numbers, and hyperbole to bring you essential conversations and insights from across the investing landscape, providing you with the critical context needed to make the right decisions for your portfolio. Find more episodes on our video hub or watch on your preferred streaming service.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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13.
Wall Street issues its most bullish 2025 S&P 500 target yet
2024-12-09 14:46:25 by Josh Schafer from Yahoo FinanceS&P 500 (^GSPC) projections for next year have a new high-water mark.
Oppenheimer chief investment strategist John Stoltzfus initiated a year-end 2025 S&P 500 target of 7,100 in a note to clients on Sunday night, marking the highest projection among strategists tracked by Yahoo Finance. The target represents roughly a 17% upside for the benchmark index from Friday's closing level.
Stoltzfus wrote his bullish outlook is "based on a number of factors including current stateside monetary policy, the resilience in economic growth, business activity, the consumer, and job creation evidenced in recent years and the current year."
The stock market trading at an increasingly high valuation is a key part of Stoltzfus's call, which pushes his target well above peers, who have targets ranging from 6,400 to 7,007. Stoltzfus sees S&P 500 earnings per share hitting $275, representing about 10% growth from his year-end 2024 call.
This isn't largely ahead of consensus. But Stoltzfus expects the S&P 500's 12-month forward price-to-earnings ratio to rise, hitting 25.8 times forward earnings, well above the five-year average of 20 times earnings.
Stoltzfus is one of several Wall Street equity strategists to cite resilient economic growth as a key driver in the year ahead. For instance, Wells Fargo's Christopher Harvey, who is the only other strategist to project the S&P 500 will close above 7,000 in 2025, highlighted a "cyclical opportunity catalyzed by upward GDP revisions."
A popular callout within that pitch has been an argument for the market rally to continue to broaden from the "Magnificent Seven" tech stocks to the other 493 members of the S&P 500. Stoltzfus noted that the broadening of the equity rally over the past year suggests that "the current bull market likely has legs strong enough to climb the proverbial 'wall of worry' into and through 2025."
Stoltzfus did cite the rising use cases for artificial intelligence as a tailwind but noted he sees this as a potential benefit across all 11 sectors as it drives productivity increases.
"We’re not suggesting paradise on earth nor are we expecting a 'Goldilocks world' but rather a genuine potential for AI to provide greater efficiencies in key areas that are challenging progress today across the sectors and society," Stoltzfus wrote. "The potential for better virtual shovels and virtual drill bits to mine a world of increasing mountains of data to find solutions at a quicker pace could be one of its greatest contributions."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
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14.
2 key inflation prints loom ahead of Fed rate cut decision: What to know this week
2024-12-08 12:49:24 by Josh Schafer from Yahoo FinanceA tech rally pushed the major indexes to new highs last week as the latest economic data releases did little to shake investor confidence that the Federal Reserve will cut interest rates at its final meeting of 2024.
In the first week of December, the Dow Jones Industrial Average (^DJI) was the lone index in the red, falling about 0.5%. Meanwhile, the Nasdaq Composite (^IXIC) soared more than 3% and the S&P 500 (^GSPC) popped nearly 1%.
In the week ahead, a crucial reading of inflation, the Consumer Price Index (CPI), is slated for release on Wednesday. A reading on wholesale inflation, the Producer Price Index (PPI), will follow on Thursday.
In corporate news, quarterly results from Broadcom (AVGO), Costco (COST), C3.ai (AI), and GameStop (GME) will highlight a quiet week of scheduled company updates.
A 'significant' inflation print
Data from the Bureau of Labor Statistics released Friday showed 227,000 new jobs were created in November, just above the 220,000 expected by economists. The unemployment rate increased to 4.2%. At large, the release didn't shift economists' and investors' thinking that the labor market is cooling but not at a rapid pace that would alter the Fed's interest rate-cutting path.
"The Fed should be in a position to move forward on the December rate cut, but next week’s CPI report now becomes another significant milestone in the policy-adjustment calculus," BlackRock chief investment officer of global fixed income Rick Rieder wrote on Friday,
"The CPI and PPI price data next week will be the main determinant of the Fed’s interest rate decision this month," said Capital Economics deputy chief North America economist Stephen Brown.
As of early Monday, markets were pricing in a roughly 88% chance the Fed cuts interest rates by a quarter of a percentage point on Dec. 18, per the CME FedWatch Tool.
The final CPI release before the Fed's meeting is expected to be released at 8:30 a.m. ET on Wednesday. Wall Street economists expect headline inflation rose 2.7% annually in November, an increase from the 2.6% in October. Prices are set to rise 0.3% on a month-over-month basis, per economist projections, above the 0.2% month-over-month increase in September.
On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in November. This would mark the fourth straight month of a 3.3% reading of core CPI. Monthly core price increases are expected to clock in at 0.3%, also in line with the October gain.
"The disinflationary momentum is fading, and new headwinds (e.g., the potential for tariffs and tax cuts) have emerged that make the final leg of inflation's journey back to the Fed's 2% target look increasingly difficult," the Wells Fargo Economics team led by Jay Bryson wrote in a weekly note. "The stubborn picture of inflation that has surfaced over the past few months is unlikely to be altered by the November CPI report."
'More of the same'
Markets drifted higher last week in a similar fashion to that seen since President-elect Donald Trump won the nomination on Nov. 6.
Citi US equity strategist Scott Chronert, who sees the S&P 500 ending the year at 6,100, remarked the market action has been "more of the same" and "post-election enthusiasm to a markets-friendly Trump administration remains at work."
This has been hallmarked by significantly low volatility in the market. The CBOE Volatility Index, known as simply the VIX (^VIX), has been hovering around 13, its lowest level since before the market drawdown seen in early August.
As of now, Chronert sees one clear risk event on Dec. 18 that can stop the rally in the final weeks of the year.
"The December Fed meeting seems to be the remaining hurdle to price action into year-end," Chronert said.
And the concern of a hawkish Jerome Powell at the Fed's final meeting of 2024 could start brewing in the week ahead if the November inflation data is worse than expected.
"The inflation numbers definitely are something," Calamos Investments CEO John Koudounis told Yahoo Finance when asked what risks he's concerned about into year-end. "If they're really out of whack, that's going to be something that people are going to look at."
Tech takes over
The Magnificent Seven tech stocks roared in the past week. All seven stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — all handily outperformed the S&P 500. Meta, Amazon, and Apple all closed at record highs on Friday. Roundhill's Magnificent Seven ETF (MAGS), which tracks all seven stocks, also closed at an all-time high.
The move higher in Big Tech comes as many Wall Street strategists have been calling for a broadening out of stock market performance in 2025. But as we noted last week, the near-term fundamental story has been favoring the Magnificent Seven, where earnings estimates have largely been holding up better than the rest of the market.
This trend has some investors still bullish on the larger tech cohort headed into next year.
"If you overlay relative price trends of technology with relative earnings trends, they've been going hand in hand," Trust co-chief investment officer Keith Lerner told Yahoo Finance.
Lerner added that on a three-year rolling basis, the Technology sector itself is outperforming the S&P 500 by 33%, a far cry from the 252% outperformance seen at the peak of the dot-com bubble. This means tech stocks, and the bull market overall, could have more room to run.
"Every bull market tends to have a theme," Lerner said. "And if you believe the bull market is intact, which we do, then that theme is likely to continue to the end of it. And when it tops, that likely tells you we're at the top of the bull market."
Weekly calendar
Monday
Economic data: Wholesale inventories, month-over-month, October final (0.2% prior); New York Fed one-year inflation expectations, November (2.87% prior)
Earnings: Casey's (CASY), C3.ai (AI), MongoDB (MDB), Rent the Runway (RENT), Oracle (ORCL), Toll Brothers (TOL), Vail Resorts (MTN)
Tuesday
Economic data: NFIB Small Business Optimism, November (94.1 expected, 93.7 prior); Nonfarm Productivity, third quarter final (2.2% expected, 2.2% prior); Unit labor costs, third quarter final, (1.4% expected, 1.9% prior)
Earnings: AutoZone (AZO), Academy Sports and Outdoors (ASO), Dave & Buster's (PLAY), GameStop (GME), Stitch Fix (SFIX),
Wednesday
Economic data: MBA Mortgage Applications, week ending Dec. 6 (+2.8% prior); Consumer Price Index, month-over-month, November (+0.3% expected, +0.2% prior); Core CPI, month-over-month, November (+0.3% expected, +0.3% previously); CPI, year-over-year, November (+2.7% expected, +2.6% previously); Core CPI, year-over-year, November (+3.3% expected, +3.3% previously); Real average hourly earnings, year-over-year, November (+1.4% previously)
Earnings: Adobe (ADBE), Macy's (M), Vera Bradley (VRA)
Thursday
Economic data: Initial jobless claims, week ending Dec. 7 (224,000 prior); Producer Price Index, month-over-month, November (+0.3% expected, 0.2% previously); PPI, year-over-year, November (+2.4% prior)
Earnings: Broadcom (AVGO), Costco (COST), Lovesac (LOVE)
Friday
Economic data: Import prices, month-over-month, November (-0.3% expected, +0.3% prior); Export prices, month-over-month, November (-0.3% expected, +0.8% prior)
Earnings: No notable earnings.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
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15.
Jobs Report Warmer than Expected: 227K; 4.2% Unemployment
2024-12-06 15:28:00 by Mark Vickery from ZacksFriday, December 6, 2024
It’s finally here: the non-farm payroll Employment Report for November, from the U.S. Bureau of Labor Statistics (BLS). Headline 227K new jobs filled last month came slightly ahead of the 214K analysts were expecting. Everyone expected a bounce-back from a strike-and-hurricane-ravaged October headline, which itself was upwardly revised to 36K. The Unemployment Rate, also unsurprisingly, ticked up to 4.2%.
This is warmer than many observers — including those in the Fed, most particularly Chair Jerome Powell — had been expecting by this time of the year. Long was the belief — with about a year and a half of an inverted 2-year/10-year bond yield curve, which was a sure red flag — that a recession was on the way, if not by mid-2024 than certainly by the end of it. But the economy is proving far more resilient than that.
Average Hourly Earnings rose 10 basis points (bps) to +0.4%, the highest rate since we saw a +0.5% way back in January. This is another notch for a more-robust labor market. Year over year, +4.0% is steady, not coming down. And the Labor Force Participation Rate and the Average Workweek came down. The U-6 segment, aka “real unemployment,” reached +7.8%, the highest since August.
We had heard reports on low holiday retail hiring so far this season, but those numbers wouldn’t likely show up until December BLS numbers. That said, to whatever extent that may have been part of the narrative in the current report, may have been a subtle headwind against an already-strong 227K new jobs created last month.
What Do Today’s Jobs Numbers Mean for Fed & Interest Rates?
With this big report out and filling in a lot of unchecked boxes, attention turns to the Fed’s dot-plot on interest rate reductions going forward. Once cutting began after signs of a slowing economy back in September, most economic prints thereafter have shown a measured cooling in a very “soft-landing” way.
But in two of the last three months of BLS data, we’re seeing resistance. The trailing 4-month average of +149K new jobs per month (including the crummy October) is nearly identical to the +148K trailing average the previous 4 months. We’re not going to put all of our weight on it, but it’s starting to feel like a floor.
Nobody seems to be meaningfully resistant to a 25 bps cut in two weeks, to a 4.25-4.50% range, so that does not look to be too much in danger. It’s unlikely any major data-driven event will have enough impact to keep this cut from happening in that short amount of time.
But analysts are now agnostic about rate cuts in the new year. Prints like today’s hotter jobs report is a good example of why the Fed should be cautious moving forward too generously with rate cuts. On December 18th, once the likely 25 bps cut occurs, we’ll also hear how Powell is shifting his and the rest of the Fed’s outlook on possible re-inflation into 2025.
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16.
US economy adds 227,000 jobs in November, unemployment rate rises to 4.2% as labor market rebounds
2024-12-06 13:34:02 by Josh Schafer from Yahoo FinanceThe US economy added more jobs than forecast in November while the unemployment rate ticked higher as the labor market rebounded from a month negatively impacted by severe weather and labor strikes.
Data from the Bureau of Labor Statistics released Friday showed 227,000 new jobs were created in November, just above the 220,000 expected by economists. The unemployment rate increased to 4.2%.
Hurricanes and a strike by Boeing (BA) workers weighed heavily on the October report, which was revised to show there were 36,000 jobs created last month. The unemployment rate stood at 4.1% in October.
Job growth for September was also revised higher on Friday, with revisions now indicating the US economy added 56,000 more jobs than initially reported over those two months.
RSM chief economist Joe Brusuelas told Yahoo Finance that Friday's report reflects a "remarkably calm labor market" that is at full employment after accounting for October's distortions.
Wage growth, an important measure for gauging inflation pressures, rose 0.4% in November, in line with October's increase and higher than the 0.3% rise economists had expected.
Compared to the prior year, wages rose 4% in November, more than than 3.9% that had been forecast.
Meanwhile, the labor force participation rate fell to 62.5% in November, down from 62.6% in October.
In its release, the BLS noted employment in the transportation equipment manufacturing industry rose by 32,000, "reflecting the return of workers who were on strike." Temporary help services employment rose modestly in November but also marked a turnaround from a loss of over 33,000 jobs in this industry the prior month.
The report comes as investors look for clues on whether or not the Federal Reserve will cut interest rates for the third time this year at its Dec. 18 meeting.
Entering the print, markets were widely expecting the Federal Reserve to cut interest rates by a quarter of a percentage point in December. As of Friday morning, markets are pricing in a nearly 87% chance the Fed cuts rates in December, up from a 66% chance seen a week ago, per the CME FedWatch Tool.
Economists argue that the November jobs report should do little to change that thinking.
"For the Fed, these numbers are going to be right in the spot of what they were looking for and they're comfortable with to continue easing policy at least at the December meeting," Citi senior global economist Robert Sockin told Yahoo Finance. "This doesn't change the narrative that likely rates are restrictive and they have to at least come down a bit more at a gradual pace."
Sockin added that while the increase in the unemployment rate could be seen as an early sign of concern that the labor market is weakening, the metric remaining in the low 4% range for the past several months is "sort of the definition of a soft landing."
"When you look over the last several reports, [the Fed will] be fairly comfortable that they're still getting that soft landing," Sockin said. "But there are enough risks that I think they still need to lower rates."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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17.
1 Unstoppable ETF Can Generate 10x Returns in the Long Run
2024-12-06 11:27:00 by David Jagielski, The Motley Fool from Motley FoolInvesting in a stock with the hopes of it turning into 10 times its value is enticing, and it can lead to investors taking on significant risk for the sake of scoring a huge return. But the danger is that risky investments may not only underperform the market, they could lead to significant losses and destroy your portfolio.
For buy-and-hold investors, there are much safer ways to achieve 10x returns in the markets. Exchange-traded funds (ETFs) offer some terrific diversification, and while they might not double or triple in value in a short timeframe, they can still grow your money significantly over the years.
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A top ETF for investors to consider for the long haul is the Invesco QQQ Trust (NASDAQ: QQQ). Here's why it can be an ideal buy right now, and how it can generate 10x returns.
Historically, the fund has significantly outperformed the broader stock market
When times are good, growth stocks are where you want to invest. That's where the biggest gains often are. Undeniably, when market conditions aren't great, it's usually also growth stocks that can face the deepest declines.
Unfortunately, it's extremely difficult -- if not outright impossible -- to predict which year will be an exceptional one for the market versus a disastrous one. By staying invested for the long run, however, you can put yourself in a position to end up with great returns in the end. The gains from good years will likely more than offset the declines during the bad years. Investing in the stock market has been a solid move for investors, as over the long haul, the S&P 500 has averaged an annual return of around 10%.
To increase the odds of achieving a high return, the Invesco QQQ Trust can make for an even better investment option. It has positions in the top 100 non-financial stocks on the Nasdaq, positioning it for some significant growth. In recent years, with the markets being red hot, it has drastically outperformed the S&P 500.
Generating a 10x return could take a lot longer right now
From the chart above, you can see that the ETF has generated better than 10x returns over the past two decades. But investors should be careful not to make the assumption that it can replicate that type of performance in the future, because with the markets at record levels, there could be lighter returns than usual in the years ahead.
However, if you simply remain invested in a growth-focused fund such as the Invesco QQQ ETF, you'll still likely end up with some considerable gains in the long run. Suppose, for example, that the fund grows by a slower rate of 8% per year (including dividends), on average. Here's how a hypothetical $10,000 investment would grow in the fund under such an assumption.
| Year | Investment Value | Times Original Value |
|---|---|---|
| 5 | $14,693 | 1.47 |
| 10 | $21,589 | 2.16 |
| 15 | $31,722 | 3.17 |
| 20 | $46,610 | 4.66 |
| 25 | $68,485 | 6.85 |
| 30 | $100,627 | 10.06 |
Calculations by author.
It could take as long as 30 years, but even at a slower growth rate, it's possible to see your investment grow to more than 10 times its original value.
A no-brainer ETF to buy and hold
Estimating how long it may take for an investment to generate 10x returns is based on assumptions. Whether the Invesco QQQ fund averages an 8% return or grows by 7% or 9% can have a drastic effect on your portfolio's overall performance.
Instead of trying to predict what the actual return might be, investors should focus on the following two takeaways from all this, which is what matters most.
The first is that the Invesco QQQ fund can potentially be a market-beating investment in the long run. However well the market does, odds are, by focusing on the best growth stocks, the Invesco QQQ ETF can come out with stronger returns, making it an ideal place to invest.
The second takeaway is that it's better to remain in the markets than trying to time them, as that could result in you missing out on gains along the way. Even if stocks may seem expensive right now, over the very long run, they are still likely to rise in value, which is why it may not be too late to invest in the Invesco QQQ fund despite its impressive returns. That doesn't mean every year will be a good one, but over time, the gains should more than offset the losses.
For buy-and-hold investors, this ETF can be a no-brainer investment that you can just add to your portfolio and forget about.
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1 Unstoppable ETF Can Generate 10x Returns in the Long Run was originally published by The Motley Fool
18.
Jobless Claims Mixed, Trade Deficit Slimmer
2024-12-05 15:18:00 by Mark Vickery from ZacksThursday, December 5, 2024
The final Jobs Week of 2024 continues this morning, with Weekly Jobless Claims reporting mixed results, whether we’re looking at new claims or longer-term ones. Pre-market futures have not budged from prior to these new numbers hitting the tape, and at this hour, market indexes are rolling back those fresh all-time closing highs that have been the narrative of the week so far.
Initial Jobless Claims Tick Up, Continuing Claims Down
Initial Jobless Claims bumped up to +224K last week, the first time this print has gone above +220K since the first week of November. It’s up 9K from the previous week’s upwardly revised +215K from the previous week — but still representative of a healthy labor situation overall. (Recall two months ago, new jobless claims shot up temporarily to +260K for one week.)
Continuing Claims, on the other hand, dipped back below 1.9 million for the first time in three weeks: 1.87 million is lower than analysts had anticipated. That said, we remain on a higher tier that we haven’t seen for three years — up toward 2 million longer-term jobless claims. But even at that level — which, subtracting the Covid era, we hadn’t seen since 2016 — it’s not necessarily a cause for concern.
Trade Deficit Shrinks in October
The other economic report ahead of today’s opening bell in the U.S. Trade Balance, which has always posted a deficit for nearly 50 years, came in lighter than expected: -$73.8 billion, from the -$74.8 billion consensus estimate. It’s also better than the previous read, which reached a more than two-year low to -$84.4 billion, and the slimmest deficit since August of this year. Weaker oil prices are likely informing much of this deficit relief.
What to Expect from Friday’s Jobs Report
The Big Kahuna of this final Jobs Week of the year comes tomorrow morning: non-farm payrolls and a new Unemployment Rate, together which constitute the Employment Situation report for November. Estimates for job gains are currently +214K, although perhaps with something of a downward bias based on ADP ADP private-sector payrolls Wednesday coming in lighter than anticipated.
The Unemployment Rate is expected to tick up 10 basis points (bps) to 4.2%, which would make seven months in a row of +4% unemployment or higher. This in itself is not a cause of concern, however; a gradual unwinding of the labor market from historically strong levels, if nothing else, will help keep the Fed’s dot plot for lowering interest rates intact.
The things to watch out for are big surprise swings in this data — either much higher or much lower. Obviously, if we see another +12K new jobs created like we did last month (which was explained away by hurricane conditions in the Southeast for October), this would illustrate a far weaker labor market than we’ve seen since the Covid pandemic. And if we’re much higher than +200K, this may bring into question whether the December 18th anticipated 25 bps interest rate cut will happen as planned. The Fed, after all, is guarding against inflation and in favor of full employment. Will it need to cut if employment is perceived as “full”?
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19.
Trump's Favorable Nominations That Leverage Bitcoin to Push Higher
2024-12-05 10:09:32 by ShantiPutri from GuruFocus.comThe global Bitcoin's transactions turnover is now higher with thousands of transactions take place within a single day. The U.S. has a large part in the worldwide Bitcoin market. And under the president-elect Trump's administration, better regulation for crypto transaction could give a boost to the first and foremost cryptocurreny, Bitcoin. His support can be seen through his nominations:
Scott Bessent
A nominee for Treasury Secretary, Bessent is known to be a supporter for Bitcoin and cryptocurrencies as a whole. His support for crypto has sparked a positive outlook within the sector. It is therefore anticipated that Bessent's leadership will lead to a more proportional regulation outcome which may improve the crypto transaction in the U.S.
Paul Atkins
Since appointed as the chief of the SEC, Atkins's supportive stance to crypto assets is expected resulting to the better regulatory measures and minimize the hinder of cryptocurrency businesses growth. His nomination sparked a massive boost in the Bitcoin price to go above $100,000 for the first time.
Peter Navarro
Appointed as a Senior Council for Trade and Manufacturing his job description to be mainly centered on tradepolicies and tariffs. Although not directly related to Bitcoin, his economic measures could in the future have an effect on the world financial market including impacting on bitcoin and broader cryptocurrencies.
This article first appeared on GuruFocus.20.
BlackRock sees 'exceptionalism' powering US stocks higher in 2025
2024-12-05 10:00:25 by Josh Schafer from Yahoo FinanceUS stocks have led the equity market in recent years and strategists at BlackRock's Investment Institute don't see that narrative changing in 2025.
"Currently, across all the scenarios in the outlook, the platform is gravitating towards the US corporate strength scenario, which is another way of calling for US exceptionalism," BlackRock Investment Institute chief investment strategist Wei Li said during a media roundtable on Wednesday.
Li cited stronger earnings growth seen in the US this year and the expectation that earnings growth will continue to broaden outside of the "Magnificent Seven" names that have powered the stock market higher over the last two years. This view has been a common refrain from Wall Street firms offering bullish outlooks for 2025 over the last month.
"Earnings is almost everything when it comes to longer-term equity returns," Li said, adding the strongest revisions for next year have come from the US and Japan, where BlackRock is also overweight equities.
BlackRock's call for continued US exceptionalism has been echoed at other firms on Wall Street during 2025 outlook roundtables.
On Monday, Bank of America senior US economist Aditya Bhave told Yahoo Finance's Alexandra Canal the US economy will likely outperform in 2025. In October, the team at JPMorgan Asset Management said it believes the US's role in the rise of artificial intelligence will help its economy outpace others around the world.
The firm said this will result in US equities continuing to dominate globally over the next decade.
"We expect extraordinary earnings growth will settle at still-elevated levels for mega-cap tech while reaccelerating in other areas of the market," JPMorgan Asset Management's chief global strategist David Kelly wrote in his team's 2025 outlook.
"This broadening, coupled with resilient economic fundamentals, policy tailwinds, and secular trends, should support a more inclusive rally in the year ahead."
On a sector level, BlackRock noted Wednesday that Utilities (XLU) should be set to benefit from the broadening of the AI trade due to the increased power demands to operate AI servers.
All of this puts BlackRock further overweight US equities headed into 2025 and betting on a "pro-risk" environment in 2025.
"In an environment where there's spirit animals that are poignant, it's not clear exactly who's going to take away the punch bowl in this environment," said Jean Boivin, the head of BlackRock's Investment Institute.
"We're constructive, we're pro-risk ... But I think we need to be mindful of excessive risk-taking at some point as well down the road."
And while BlackRock doesn't issue an S&P 500 target for the year ahead, its bullish stance on US stocks has been reflected across Wall Street's 2025 outlooks. Strategists tracked by Yahoo Finance have issued 2025 year-end S&P 500 targets as low as 6,400 and as high as 7,007.
The index closed at 6,086 on Wednesday, meaning the low-end 6,400 target represents about a 5% upside in the benchmark index over the next year. Meanwhile, the high end of forecasts is calling for another 15% gain in the S&P 500 over the next 12 months.
Strategists believe another strong year of growth in both the US economy and corporate earnings, combined with a pro-business administration in the White House and Federal Reserve interest rate cuts, will propel stocks higher.
In a Tuesday research note detailing his Street-high 7,007 S&P 500 target, Wells Fargo equity strategist Christopher Harvey wrote the data "did not support" a weak or negative year for the S&P 500.
"2025 is likely to be a solid-to-strong year," Harvey wrote.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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21.
Wells Fargo issues Wall Street's most bullish forecast yet for the stock market in 2025
2024-12-03 20:38:47 by Josh Schafer from Yahoo FinanceWall Street 2025 stock forecasts have a new high-water mark.
Wells Fargo equity strategist Christopher Harvey and his team issued a 2025 year-end target of 7,007 on Tuesday, the highest target among Wall Street strategists tracked by Yahoo Finance and a forecast that suggests the S&P 500 (^GSPC) could rise more than 26% next year.
The target is just seven points higher than those of Deutsche Bank and Yardeni Research, which have called for the S&P 500 to finish 2025 at 7,000.
"On balance, we expect the Trump Administration to usher in a macro environment that is increasingly favorable for stocks at a time when the Fed will be slowly reducing rates," Harvey wrote in his 2025 equity outlook.
"In short, a backdrop where equities continue to rally."
Harvey added that stocks will rise in an environment where corporate margins continue to expand, the US economy grows faster than the current 2.1% consensus forecast, and there is a "slight late 2025 benefit from a pickup in M&A Activity."
Harvey sees a similar playbook to Bank of America's 2025 outlook, which laid out a case for US economic growth to drive gains in cyclical sectors.
Harvey believes the cyclical opportunity will be "catalyzed by upward GDP revisions and regulatory environment."
This includes a call for the S&P 500 equal-weighted index (^SPXEW), which isn't overly influenced by moves of the largest stocks like the benchmark cap-weighted index, to perform well in 2025.
In other words, Harvey is the latest voice on Wall Street that expects the market rally to continue to broaden from the "Magnificent Seven" tech stocks to the other 493 members of the S&P 500.
Harvey wrote in his note he initially wanted to "lean contrarian," given concerns about bullish market sentiment, lofty stock valuations, and already solid economic growth.
But, Harvey wrote, "the data did not support" a weak or negative year for the S&P 500.
"2025 is likely to be a solid-to-strong year," Harvey wrote.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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22.
South Korea Declares Martial Law and Ignites Geopolitical Tensions
2024-12-03 17:45:53 by ShantiPutri from GuruFocus.comGeopolitical tension in Asia is reheated as South Korean President Yoon Suk Yeol declared martial law in a broadcast live on YTN on December 3, 2024.
"I declare martial law to protect the free Republic of Korea from the threat of North Korean communist forces, to eradicate pro-North Korea anti-state forces that deprive our people of freedom and happiness, and to protect the free constitutional order," Yoon said.
Today is the first time of martial law declaration since the last time South Korea declared martial law was in 1980s. Yonhap News Agency reported that military authorities will ban parliamentary and political party activities, placing media and publishers under military emergency command control.
Yoon did not specify who he considered pro-North Korea anti-state forces but mentioned that such forces had obstructed his agenda and undermined the country in the past.
The South Korean Won (KRW) immediately dropped against the US dollar. The central bank officially stated they are preparing measures to stabilize the market if necessary.
The White House did not immediately respond to requests for comment. Now there are about 28,500 troops of the United States have been deployed in South Korea to protect against attacks from North Korea.
President Yoon said he had no other option than to do this in order to preserve free and constitutional order, pointing at the opposition parties for halting parliament session and putting the country into turmoil.
"Tank, armored personnel carriers, and soldiers with guns and knives will take over this country," said Lee Jae-myung, leader of the opposition Democratic Party, which holds a majority in parliament, in a live online broadcast. "The economy of the Republic of Korea will collapse and become irreparable. Fellow citizens, please come to the National Assembly."
This article first appeared on GuruFocus.23.
SpaceX Valuation Soars: Tender Offer Could Value Company at $350 Billion
2024-12-03 13:05:14 by ShantiPutri from GuruFocus.comSpaceX led by Elon Musk is causing ripples into the industry today as talks come alive with them considering a tender offer that could boost the valuation to as high as $350 billion from previously worths at $210 billion. The tender offer is facilitated by SpaceX itself with negotiating to sell insider shares.
That means the tender offer would open a way for current shareholders which may include employees and early investors to sell their shares to new investors or existing investors while SpaceX remain to be a privately controlled company.
The new or existing investors could be those private equity firms, institutional investors or individuals interested in owning a stake in a private company such as the SpaceX.
The new valuation reflects investor confidence in SpaceX's projects such as Starship spacecraft which is hoped to change how people travel through space and Starlink satellite internet which is hoped to provide internet to all parts of the world.
The tender offer demonstrates the increasing awareness of what these projects could represent, and as SpaceX keeps on charging forward its extraordinary increasing value proposition promise.
This article first appeared on GuruFocus.24.
S&P 500 will hit 6,666 in 2025 with large-cap value stocks leading the way: BofA
2024-12-02 17:19:58 by Josh Schafer from Yahoo FinanceThe stock market rally is far from over, according to Bank of America's equity and quantitative strategy team.
In a research note released to reporters on Monday, BofA's equity strategy team, led by Savita Subramanian, issued a 6,666 year-end target for the S&P 500 in 2025. The call is the third-highest among strategists tracked by Yahoo Finance and represents a roughly 10.5% gain from current levels.
Part of the firm's bullishness comes from an expectation for strong economic growth. Some equities are set to benefit more than others, according to the note.
Bank of America's economics team projects the US economy will grow at an annualized rate of 2.4% in 2025, higher than Bloomberg consensus forecasts for 2% growth.
This has BofA favoring "GDP sensitive companies," with the firm recommending overweights on the Financials (XLF), Consumer Discretionary (XLY), Materials (XLB), Real Estate (XLRE), and Utilities (XLU) sectors.
"We see more opportunities in stocks than the index," Subramanian wrote. "In particular, we like companies with healthy cash return prospects and a tether to the US economy: large cap Value stocks."
Subramanian's team is also calling for a broadening out of the stock market rally from the "Magnificent Seven" tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — to the other 493 members of the S&P 500.
BofA believes the S&P 500 equal weight index (^SPXEW), which isn't overly influenced by moves of the largest stocks in the index like its counterpart cap-weighted index (^GSPC), will outperform in 2025.
"Euphoria around mega-cap Tech is evident in growth expectations for the Magnificent 7 approaching all-time highs, just when their earnings are slated to decelerate and the average company's earnings are slated to accelerate," the firm wrote.
This falls in line with a call from RBC Capital Markets head of US equity strategy Lori Calvasina, who sees the S&P 500 hitting 6,600 at the end of next year, and is in a similar vein as Goldman Sachs' projection for the S&P 500 to hit 6,500 in 2025 amid a "narrowing" Big Tech outperformance.
"For Value to outperform, in recent years we’ve needed to see GDP run a bit hotter [than the consensus of 2%]," said Calvasina, who sees GDP in a range of 2.1%-3% in 2025.
"We’ve given an edge to the broadening of market leadership or the shift into Value [versus the Magnificent 7], but think it’s a close call."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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25.
Crucial jobs report kicks off December trading: What to know this week
2024-12-01 12:40:17 by Josh Schafer from Yahoo FinanceStocks will enter the final month of 2024 near record highs as investors look to cap off what's been another stellar year for US stocks.
During last week's holiday-shortened trading, the Dow Jones Industrial Average (^DJI) rose more than 2%. Meanwhile, the Nasdaq Composite (^IXIC) and the S&P 500 (^GSPC) rose more than 1%. Both the S&P 500 and Dow Jones ended November at all-time highs.
In the week ahead, a crucial run of labor market data is set to greet investors, with Friday morning's November jobs report from the Bureau of Labor Statistics serving as the week's most important release. Updates on job openings and private wage growth, as well as readings on activity in the services and manufacturing sectors, will also scatter the schedule.
Investors will look to this week's economic data for clarity on the Federal Reserve's next move on interest rates, which will be announced on Dec. 18.
In corporate news, earnings from Salesforce (CRM), Okta (OKTA), and Lululemon (LULU) will highlight the coming week's schedule.
A labor look-in
Expectations for future rate cuts from the Federal Reserve have shifted in recent months.
As of Friday, markets were pricing in a 66% chance the Fed cuts rates at its final meeting of the year on Dec. 18, per the CME FedWatch Tool. But looking out further, markets are pricing in just two more rate cuts over the next year, with concerns growing about the Fed's progress on bringing down inflation.
A labor market that continues to slow, but not dramatically, also likely keeps the Fed focused on inflation, which makes a less compelling case for aggressive rate cuts in 2025. An update on that narrative will come with the November jobs report, due for release at 8:30 a.m. ET on Friday.
Economists expect the report to show a reversal of the dismal October employment report that many believed was heavily impacted by hurricanes and worker strikes.
The November report is expected to show the US labor market added 200,000 jobs in the month, up from the 12,000 monthly job additions seen in October. Meanwhile, the unemployment rate is expected to have inched up to 4.2% from 4.1%.
"Through the monthly swings of nonfarm payrolls, we expect the November employment report to reiterate that while the labor market remains solid in an absolute sense, the softening trend in employment conditions has yet to cease," the Wells Fargo Economics team led by Jay Bryson wrote in a note to clients. "That message is likely to come through more clearly from the unemployment rate, which we look to rise to 4.2%."
'Magnificent' earnings revisions
Wall Street strategists have been largely bullish when issuing 2025 forecasts, with strategists tracked by Yahoo Finance seeing the S&P 500 ending the year between 6,400 and 7,000. A frequent call in these outlooks has been for a continued broadening of the stock market rally away from the "Magnificent Seven" tech stocks — Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — and toward the other 493 stocks in the index.
"We’ve given an edge to the broadening of market leadership or the shift into Value, but think it’s a close call," RBC Capital Markets head of US equity strategy Lori Calvasina wrote, emphasizing that another strong year of economic growth could help support the S&P 493.
But not everyone agrees. Barclays head of US equity strategy Venu Krishna pointed out that Big Tech continues to top earnings estimates each quarter. And as long as that streak continues, Krishna argued "Big Tech is likely to remain as critical of an EPS growth driver for the S&P 500 as the group was this year."
To Krishna's point, while the broadening is expected to take place throughout next year, earnings revisions remain more positive for many Big Tech names than the rest of the S&P 500.
In a research note published on Nov. 27, DataTrek co-founder Jessica Rabe pointed out that six Big Tech companies have seen earnings revisions for the current quarter come in either flat or higher in the past 30 days. Only Microsoft and Apple have seen their earnings estimates cut more than the S&P 500's 1.2% estimate trim in that time frame.
Meanwhile, the S&P 500's 10 largest non-tech companies have seen earnings estimates slashed by an average of 2.7%.
"US Big Tech names have solid earnings estimate momentum, and they are much better off than the S&P as a whole as well as its top 10 non-Tech holdings," Rabe wrote. "Fortunately, Big Tech makes up a third of the S&P, so their fundamentals have an outsized impact on the index."
The case for a strong December
Another popular call among strategists has been for the roaring bull market to continue through year-end, with more all-time highs in store before trading wraps up in 2024.
And history supports that argument.
Carson Group chief markets strategist Ryan Detrick reminds us that, in markets, strength often begets strength. Dating back to 1985, when the S&P 500 has rallied more than 20% entering December, the benchmark index has risen further 9 out of 10 times. Since 2000, the index has risen every December after a rally of this magnitude over the year's first 11 months.
"History says a chase into year-end is quite possible," Detrick wrote in a research note.
Weekly Calendar
Monday
Economic data: S&P Global US manufacturing PMI, November final (48.8 expected, 48.8 previously); Construction spending month-over-month, October (0.2% expected, +0.1% previously); ISM Manufacturing, November (47.6 expected, 46.5 previously); ISM prices paid, November (54.8 expected);
Earnings: Zscaler (ZS)
Tuesday
Economic data: Job openings, October (7.51 million expected, 7.44 million previously);
Earnings: Box (BOX), Marvell (MRVL), Okta (OKTA), Pure Storage (PSTG), Salesforce (CRM)
Wednesday
Economic data: MBA Mortgage Applications, week ended Nov. 29 (+6.3% previously); ADP Private Payrolls, November (+165,000 expected, +233,000 previously); S&P Global US Services PMI, November final (57 previously), S&P Global US Composite PMI, November final (55.3 previously); ISM Services index, November (55.5 expected, 56 previously); ISM Services prices paid, November (58.1 previously); Factory orders, October (0.3% expected, -0.5% previously); Durable goods orders, October final (+0.2% previously)
Earnings: American Eagle Outfitters (AEO), Campbell's (CPB), ChargePoint (CHPT), Chewy (CHWY), Cracker Barrel (CBRL), Dollar Tree (DLTR), Five Below (FIVE), Foot Locker (FL), Hormel Foods (HRL), RBC (RBC), Victoria's Secret (VSCO)
Thursday
Economic data: Challenger jobs cuts, year-over-year, November (+50.9% previously); Initial jobless claims, week ending Nov. 30 (213,000 previously)
Earnings: BMO (BMO), Build-a-Bear Workshop (BBW), Dollar General (DG), DocuSign (DOCU), Hewlett Packard Enterprise (HPE), Kroger (KR), Lululemon (LULU), Petco (WOOF), TD Bank (TD), Ulta Beauty (ULTA)
Friday
Economic calendar: Nonfarm payrolls, November (+200,000 expected, +12,000 previously); Unemployment rate, November (4.2% expected, 4.1% previously); Average hourly earnings, month-over-month, November (+0.3% expected, +0.4% previously); Average hourly earnings, year-over-year, November (+3.9% expected, +4% previously); Average weekly hours worked, November (34.3 expected, 34.3 previously); Labor force participation rate, November (62.6% previously)
Earnings: BRP (DOOO)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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26.
Wall Street sees 'slower' pace of Fed rate cuts in 2025
2024-11-29 10:00:30 by Josh Schafer from Yahoo FinanceMarkets widely expect the Federal Reserve to cut interest rates for the third time this year at its December meeting. The question is what the central bank will do next year.
Recent sticky inflation prints and evidence the US economy is growing at a solid pace have raised doubts that the Fed will bring down rates as quickly as it previously indicated. In September, the Fed's Summary of Economic Projections (SEP) projected four interest rate cuts next year.
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Markets are currently projecting roughly two cuts in 2025, per Bloomberg data. The Fed is scheduled to release an updated forecast on Dec. 18.
While they differ on the specifics, Wall Street economists generally agree that the central bank's current rapid pace of rate cuts won't continue.
"As we head into 2025, we're likely to see a slower pace of cutting going forward, where the Fed likely moves to an every other meeting sort of pace," Wells Fargo senior economist Sarah House, whose team sees three interest rate cuts in 2025, said during a media roundtable on Nov. 21.
At a current range of 4.5% to 4.75%, there's little debate over whether the fed funds rate is restrictive. This has prompted many economists to believe further easing is likely in the pipeline as the Fed continues to aim for a "soft landing" where inflation falls to its 2% target without a significant downturn in the economy.
With the US economy growing at a solid pace and concerns of a labor market slowdown on the back burner for now, the sticking point in the debate is just how much the Fed will lower rates over the next year without seeing significant improvement in inflation data.
Deutsche Bank chief US economist Matthew Luzzetti sees the Fed cutting once more in December before pausing its interest rate adjustments for all of 2025 as it waits for more progress on the inflation front.
"There's a lot less urgency to cut rates," Luzzetti told Yahoo Finance. "It might make sense to slow the pace of rate cuts earlier than they expected."
Inflation progress stalls
In recent months, inflation's progress toward the Fed's 2% target has "stalled," Fed governor Michelle Bowman said in a recent speech when making the case for the central bank to proceed "cautiously" with rate cuts.
The latest reading of the Federal Reserve's preferred inflation gauge showed price increases were flat in October from the prior month. On Wednesday, the core Personal Consumption Expenditures (PCE) index showed prices increased 2.8% from the year prior in October, well above the Fed's goal.
This followed two other sticky readings of inflation that added to the debate over how deeply the Fed will cut rates in 2025.
House said that if inflation's decline slows, "it's going to be harder and harder to justify additional rate cuts."
Fed officials discussed a similar outcome during their November meeting.
"Some participants noted that the Committee could pause its easing of the policy rate and hold it at a restrictive level if inflation remained elevated," the Fed's minutes read.
Economists at both Morgan Stanley and JPMorgan see the Fed's path similarly to House and Wells Fargo, which would leave the fed funds rate in a range of 3.5% to 3.75% at the end of 2025.
"Given slowing disinflation and ebbing employment risks, we think this means the Fed slows the cutting cycle to once per quarter, until indefinitely pausing after reaching a target range of 3.5-3.75% at next September’s FOMC meeting." JPMorgan chief US economist Michael Feroli wrote in his 2025 economic outlook.
Morgan Stanley chief global economist Seth Carpenter sees a similar scenario where the Fed cuts to that same range by May and then pauses interest rate cuts until 2026 amid "signs of sticker inflation and overall policy uncertainty."
EY chief economist Greg Daco told Yahoo Finance part of the reason the Fed would pause rate cuts is to ensure it doesn't cut rates so far that its interest rate policy is "expansionary." Given that the US economy is currently considered to be on solid footing, too much help from interest rate reductions could reignite concerns that a red-hot US economy is keeping inflation sticky.
"They want to avoid a situation where, by easing too rapidly, they go below [the neutral interest rate], and suddenly monetary policy is expansionary," Daco said. The neutral rate is the level at which interest rates are viewed as neither restrictive nor supportive of economic activity.
A new wrinkle
Many economists share Carpenter's concern over "policy uncertainty" headed into 2025 as the new Trump administration enters the Oval Office.
Deutsche Bank's Luzzetti told Yahoo Finance that this uncertainty is different than the pandemic reopening changes that altered every economic data point and therefore challenged the overall economic outlook. This time around, the murky outlook is tied specifically to the details of President-elect Donald Trump's policies and the timing with which they are enacted.
While the difference between what Trump has said before gaining control of the White House and what policies actually come to fruition remains to be seen, consensus sees various versions of his tariff policies as additive to inflation. And that could be a challenge for the Fed, which is already battling sticky price increases.
When accounting for the various policies, Deutsche Bank estimates the US economy will grow at an annualized rate of 2.5% in 2025, with the rate of unemployment ending the year at 3.9% (down from 4.1% currently) and the Fed's preferred inflation gauge, "core" Personal Consumption Expenditures (PCE), ending 2025 at 2.6%.
"From the Fed's perspective, you have stronger growth, a stronger labor market, and higher inflation ... So all of those things combined just kind of had to have a hawkish implication for the Fed outlook," Luzzetti said.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Correction: A previous version of this article gave a incorrect number of rate cuts in 2024. We regret the error.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
27.
Key Fed inflation gauge shows PCE 'going sideways'
2024-11-27 15:49:48 by Josh Schafer from Yahoo FinanceThe latest reading of the Federal Reserve's preferred inflation gauge showed price increases were flat in October from the prior month, raising questions over whether progress in getting to the central bank's 2% goal has stalled.
The core Personal Consumption Expenditures (PCE) index, which strips out food and energy costs and is closely watched by the central bank, rose 0.3% from the prior month during October, in line with Wall Street's expectations for 0.3% and the reading from September.
Over the prior year, core prices rose 2.8%, in line with Wall Street's expectations and above the 2.7% seen in September. On a yearly basis, overall PCE increased 2.3%, a pickup from the 2.1% seen in September.
"Core PCE has been going sideways for the last couple of months," Paul Gruenwald, S&P Global Ratings global chief economist, told Yahoo Finance. "If you think the Fed is on a declining rate path, which we do, that's probably leaning toward the pause [cutting interest rates] camp."
Gruenwald added that the Fed won't be in a hurry to cut rates unless it sees a "more convincing decline" in core PCE.
Entering the release, markets have been debating how much further the Fed will cut interest rates over the next year. Minutes from November's Fed meeting released on Tuesday revealed some officials believe the Fed could pause cutting rates if "inflation remained elevated."
Read more: What the Fed rate cut means for bank accounts, CDs, loans, and credit cards
Recent data has added to that case. Earlier this month, the core Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices in October posted an annual gain of 3.3% for the third consecutive month. Meanwhile, the core Producer Price Index (PPI) revealed prices increased by 3.1% annually in October, up from 2.8% the month prior and above economist expectations for a 3% increase.
In a recent speech, Federal Reserve governor Michelle Bowman expressed concern that the Fed’s progress toward its 2% inflation goal has “stalled” and said the central bank should proceed "cautiously" when cutting interest rates.
"We have seen considerable progress in lowering inflation since early 2023, but progress seems to have stalled in recent months," Bowman said in a speech at the Forum Club of the Palm Beaches.
Still, markets expect the Federal Reserve to cut interest rates once more in 2024. As of Wednesday morning, markets were pricing in a roughly 67% chance the Fed cuts rates at its December meeting, per the CME FedWatch tool.
"The momentum in inflation toward the Fed’s 2% target has sputtered recently but not enough, in our view, to prevent the Fed from cutting interest rates in December," Oxford Economics chief US economist Ryan Sweet wrote in a note to clients on Thursday.
Additional inflation data before the Fed's interest decision on Dec. 18 will influence the Fed's decision. Capital Economics deputy chief North America economist Stephen Brown wrote in a note to clients that the incoming CPI and PPI data for November, which will be out prior to the Fed's December meeting, will be "pivotal for the Fed's decision."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
28.
Wall Street still doesn't know what to make of Donald Trump: Morning Brief
2024-11-26 11:00:24 by Josh Schafer from Yahoo FinanceThis is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
A decisive win for Donald Trump eliminated any uncertainty around the results of the 2024 presidential election.
But what Trump's second term means for investors is still up for debate.
"We think it’s fair to say that the US equity market is in a discovery process regarding the domestic policy platform of the new administration and that the political backdrop presents tailwinds and potential headwinds for stocks in the year ahead," RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a 2025 outlook research note on Monday.
Market action since Trump won the election on Nov 6. bears this out.
The S&P 500 (^GSPC) soared 2.5% on the day after Trump's victory. Since then, the benchmark index has risen less than 1%. At one point, the S&P 500 had given back all of its post-election bump before rallying higher once more.
Small caps, a popular Trump trade, surged after the election, with the Russell 2000 Index (^RUT) rising about 9% in the immediate aftermath. Then the trade reversed, with the index giving back over half its gains. Another swing saw the Russell 2000 hit a record intraday high on Monday.
As Calvasina wrote: "Right now we simply don’t know what the new administration will do in regard to their campaign promises, or the extent to which they will do them, adding to the fog."
Another pillar of the Trump trade saw long-term Treasury yields rise, with investors fearing new tariffs would push inflation higher. News late Friday that the president-elect would nominate Scott Bessent to be the next Treasury secretary calmed some nerves, bringing the 10-year yield roughly back to where it stood on Election Day.
In a note to clients on Monday, Capital Economics chief North America economist Paul Ashworth cautioned against reading too much into Trump's Cabinet picks given "uncertainty surrounding what policies president-elect Donald Trump will enact during his second term."
Ashworth's comments get to the root of the market's issues right now: At the end of the day, campaign promises are just that, promises.
During Trump's first term in office, nearly half of the 15 people he initially appointed to lead the executive departments were gone halfway through his presidency.
In a note Monday issuing his 2025 year-end S&P 500 forecast of 6,600, Barclays head of US equity strategy Venu Krishna opted not to include any impacts on how US policy shifts could impact earnings or valuations due to the "fluidity of the Trump 2.0 policy outlook."
"[There] is a temptation to read a lot into [Trump's] Cabinet nominations, but we would caution against that," Capital Economics' Ashworth wrote.
"Following his comprehensive election victory this is Trump’s world, while the rest of us, including his cabinet, just live in it."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
29.
Wall Street issues its most bullish S&P outlook yet for 2025
2024-11-25 21:47:15 by Josh Schafer from Yahoo FinanceWall Street's high-water mark for the S&P 500 (^GSPC) projects a nearly 17% increase from current levels at the end of 2025.
Deutsche Bank chief global strategist Binky Chadha on Monday issued a year-end target of 7,000 for the S&P 500, matching Yardeni Research's call as the most bullish among strategists tracked by Yahoo Finance.
In explaining his thinking, Chadha highlighted the current strong macroeconomic backdrop in which unemployment has remained low while economic growth has proved resilient.
"For equities, strong equity inflows are partly driven by strong cyclical growth as it impacts views on prospective corporate earnings and equity returns," Chadha wrote. "Inflows have also been driven by rising risk appetite which is currently very elevated. It certainly bears watching but risk appetite in our view should be high with the unemployment rate near 4% and GDP growth at 3%, a rare strong combination that has occurred just 6% of the time historically."
Chadha added that prior periods with similar economic backdrops include the 1960s and the back half of the 1990s, which both saw "strong equity performance."
From a sector perspective, Chadha, like others on Wall Street issuing 2025 outlooks, is skeptical that the next leg higher in markets is led by megacap tech amid slowing earnings growth. Instead, he expects growth to "continue rotating slowly in 2025" and is leaning into areas he believes could benefit from continuing economic expansion.
"At the sector level, we maintain a cyclical tilt, remaining overweight the Financials where a multitude of tailwinds are converging, Consumer Cyclicals and Materials," Chadha wrote.
While much of the focus in 2024 was on signs of slowing in the economy, Chadha's team sees a cycle where various aspects of expansion, like capital expenditure spending outside of tech, corporate confidence increases, and a pickup in mergers and acquisitions (M&A), are "still to come."
"US capital markets and M&A activity has been running at low levels on persistent uncertainties around the business cycle, inflation, domestic politics and geopolitics," Chadha wrote. "An unfavourable regulatory regime has also clearly been a drag. A combination of greater corporate confidence and an easier regulatory regime could spark a rebound in M&A and capital markets activity."
Yardeni Research president Ed Yardeni, who also sees the S&P 500 hitting 7,000 by the end of the year, told Yahoo Finance recently that part of that will be driven by a more pro-business Trump administration and the return of "animal spirits."
"We're just seeing a more pro-business administration coming in that undoubtedly will cut taxes," Yardeni told Yahoo Finance. "And not only for corporations but also for individuals. Lots of various kinds of tax cuts have been discussed. And in addition to that, a lot of deregulation."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
30.
S&P 500 seen reaching 6,600 next year by strategists at RBC, Barclays
2024-11-25 15:45:26 by Josh Schafer from Yahoo FinanceTwo more Wall Street strategists are projecting the bull market in US stocks will roll on in 2025.
On Monday, equity strategy teams at Barclays and RBC Capital Markets both issued a year-end target price of 6,600 for the S&P 500 (^GSPC) in 2025. The targets suggest a roughly 10.5% gain in the benchmark index over the next twelve months, about in line with the long-term historical average annual return over the past century.
"The story the data tells us is that another year of solid economic and earnings growth, some political tailwinds, and some additional relief on inflation (which should keep the S&P 500’s P/E elevated) can keep stocks moving higher in the year ahead," RBC Capital Markets head of US equity strategy Lori Calvasina wrote in a note to clients on Monday.
Venu Krishna, head of US equity strategy at Barclays, wrote that with "inflation continuing to normalize, resilient macro, and Big Tech maintaining EPS growth leadership," the S&P 500 should continue its march higher.
Barclays' and RBC's targets are the latest forecasts from strategists tracked by Yahoo Finance and the latest that reinforce a general optimism on Wall Street that stocks will continue to rally next year.
A highly debated component of these calls, however, has been whether or not 2025 will bring with it a continued broadening of returns outside the "Magnificent Seven" tech stocks that led the first 18 months of the bull market rally.
Calvasina argued that's the most likely case, falling in line with a recent call from Goldman Sachs that mega caps will see "narrowing" outperformance in 2025.
Calvasina and her team cited growth as a "crowded" trade leading to the potential for more flows into the value side of the market, while also noting that valuations are more attractive outside of the large tech stocks. Additionally, the 2025 earnings outlook continues to point to a slowdown in earnings growth for large-cap tech, while the S&P 493 stocks are expected to see earnings growth accelerate.
"For Value to outperform, in recent years we’ve needed to see GDP run a bit hotter," said Calvasina, who sees GDP pacing in a range of 2.1% to 3% in 2025, above the current Bloomberg consensus of 2%. "We’ve given an edge to the broadening of market leadership or the shift into Value, but think it’s a close call."
Meanwhile, Krishna pointed to the most recent quarter of earnings reports in which Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) all topped Wall Street forecasts as a reason to believe investors might not be optimistic enough about Big Tech's earnings growth in 2025.
"Big Tech is likely to remain as critical of an EPS growth driver for the S&P 500 as the group was this year," Krishna wrote.
Still, what that means for price returns in those stocks still remains to be seen.
"The last two earnings seasons have shown that headline EPS [earnings per share] beat-and-raises are not necessarily enough to drive additional share price upside amid concerns over the capital intensiveness of the next leg of growth, a consequence of the AI build out," Krishna wrote.
"We believe the potential upside from further AI uptake is not under appreciated, but it comes with a big question mark attached," Krishna added.
The calls for stocks to run higher also haven't come without warning.
RBC's Calvasina still sees an elevated likelihood of a 5%-10% drawdown occurring while the S&P 500 chugs higher to 6,600 at the end of next year.
"We have become increasingly worried about the possibility of a near-term 5-10% pullback in the S&P 500, primarily due to elevated positioning, recent froth in sentiment, and valuation that has gotten a little over its skis for 2024, which leave the S&P 500 vulnerable to bad news and perhaps simply in need of a breather," Calvasina wrote.
A continued rise in 10-year Treasury yields, further dialing back of Federal Reserve rate cut expectations for 2025, and the rising strength of the US dollar are all headwinds Calvasina is closely tracking.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
31.
Fed's preferred inflation gauge highlights holiday-shortened trading week: What to know this week
2024-11-24 12:28:46 by Josh Schafer from Yahoo FinanceStocks drifted higher leading into the shortened trading week, which includes the Thanksgiving holiday.
The Dow Jones Industrial Average (^DJI) gained nearly 2% for the past week, while the S&P 500 (^GSPC) and the tech-heavy Nasdaq Composite (^IXIC) added over 1.5%.
This week, a fresh reading on the Fed's preferred inflation gauge, the Personal Consumption Expenditures (PCE) index, will highlight the economic calendar. Updates on third quarter economic growth and housing activity are also on the schedule.
In corporate news, quarterly results from Zoom (ZM), Dell (DELL), Best Buy (BBY), CrowdStrike (CRWD), and Macy's (M) are likely to catch investor attention.
Markets will be closed on Thursday for Thanksgiving, and Friday's trading session will end early at 1 p.m. ET.
Price check
Recent sticky inflation readings have raised questions about whether the Fed will cut interest rates in December and how much the central bank will lower rates over the next year.
Earlier this month, the "core" Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices increased 3.3% in October for the third consecutive month. Meanwhile, the "core" Producer Price Index (PPI) revealed prices increased by 3.1% in October, up from 2.8% the month prior and above economist expectations for a 3% increase.
On Wednesday, Federal Reserve governor Michelle Bowman expressed concern that the Fed’s progress toward 2% inflation has “stalled” and said the central bank should proceed "cautiously" when cutting interest rates.
"We have seen considerable progress in lowering inflation since early 2023, but progress seems to have stalled in recent months," Bowman said in a speech at the Forum Club of the Palm Beaches.
Read more: Jobs, inflation, and the Fed: How they're all related
Economists expect more signs of that stalling in the Personal Consumption Expenditures (PCE) release due Wednesday. Economists expect annual "core" PCE — which excludes the volatile categories of food and energy — to have clocked in at 2.8% in October, up from the 2.7% seen in September. Over the prior month, economists project "core" PCE at 0.3%, unchanged from September.
Bank of America Securities US economist Stephen Juneau wrote in a research note that a print in line with expectations will "certainly lead Fed participants to reassess their inflation and policy outlook."
"That said," he added, "we still expect the Fed to cut rates by 25bp in December, but the risk appears to be tilting towards a shallower cutting cycle given resilient activity and stubborn inflation."
On Monday, markets were pricing in a 44% chance the Federal Reserve doesn't cut interest rates at its December meeting, up from a roughly 24% a month prior, per the CME FedWatch Tool.
Bitcoin and 'animal spirits'
While a holiday-shortened trading week will limit stock action, one of Wall Street's hottest trades since election night is likely to keep surging. Bitcoin (BTC-USD) has shot up nearly 50% since Donald Trump won the presidential election, as crypto enthusiasts have cheered a changed regulatory outlook.
On Thursday, SEC Chair Gary Gensler announced he will be stepping down on Jan. 20, and bitcoin quickly rose to nearly $100,000 per coin for the first time ever. FedWatch Advisors chief investment officer Ben Emons told Yahoo Finance the rise of bitcoin is another sign of the risk-on mood in markets present since Trump won the election.
"We may not be so much in an environment like 2021 when it was frothy," Emons said. "This is more about we're going to potentially really go into a different environment next year with the economy, with faster growth, and more liquidity. [So] then, yes, bitcoin should be trading at higher levels. So breaking $100,000 [per coin] is quite likely here."
Read more: Bitcoin clears another record: Is now the time to invest?
S&P 500 targets
Wall Street research firms are beginning to issue 2025 outlooks for the equity market. Largely, these reports have been bullish. Research teams tracked by Yahoo Finance have projected the benchmark index will finish as low as 6,400 next year or as high as 7,000.
But, as DataTrek co-founder Nicholas Colas pointed out, many of the current targets fall in line with the traditional average annual return of the S&P 500 over the last century. And that roughly 11% annual return rarely ever comes over a one-year period.
"While the mean long-run return is a comforting anchor for expectations, much less discussed is that the range around that average is very wide," Colas wrote. He pointed out that the standard deviation from the 11.7% average annual return is 19.6 percentage points. That means any return from a 7.8% decline to a 31.2% increase could be considered "entirely consistent with historical norms," he noted.
This brings Colas to what he sees as the true takeaway from Wall Street's recent bullish calls — it's more about the direction of the market than the actual projection strategists slap on the S&P 500. And Colas largely agrees with the upside many have been pointing to for next year.
"The most important issue for anyone invested in the US equity market is the stability of the US economy in 2025," Colas wrote.
He cited the US labor market's solid footing, lower interest rates, and an incoming administration that's expected to bring tax cuts and deregulation as reasons the economy will remain resilient in the coming year.
"We remain positive and believe the S&P 500 can rally more than its long-term average over the coming year," Colas wrote. "The setup going into 2025 more closely resembles exceptionally strong years rather than weak ones. We therefore expect the S&P 500 to gain around 15 percent in 2025, ending the year at 6,840 based on [Thursday's] close."
Weekly calendar
Monday
Economic data: Dallas Fed manufacturing activity, November (-3 prior)
Earnings: Bath & Body Works (BBWI), Zoom (ZM)
Tuesday
Economic data: S&P CoreLogic 20-city year-over-year NSA, August (5.20% prior); New home sales month-over-month, October (-1.8% expected, 4.1% prior); Conference Board Consumer Confidence, November (112.5 expected, 108.7 prior); Richmond Fed manufacturing index, November (-14 prior); FOMC Meeting Minutes (November meeting)
Earnings: Abercrombie & Fitch (ANF), Autodesk (ADSK), Best Buy (BBY), Burlington Stores (BURL), CrowdStrike (CRWD), Dell (DELL), HP (HPQ), Kohl's (KSS), Macy's (M), Manchester United (MANU), Urban Outfitters (URBN), Workday (WDAY)
Wednesday
Economic data: Personal income, October (0.3% expected, 0.3% prior); Personal spending, October (0.4% expected, 0.5% prior); PCE index month-over-month, October (0.2% expected, 0.2% prior); PCE Index year-over-year, October (2.3% expected, 2.1% prior); Core PCE Index month-over-month, October (0.3% expected, 0.3% prior); Core PCE Index, year-over-year, October (2.8% expected, 2.7% prior); MBA mortgage applications, Nov. 22 (0.5% prior); GDP annualized quarter-over-quarter, third quarter second estimate (+2.8% expected, +2.8% prior); Core PCE Price Index quart-over-quarter, third quarter second estimate (2.2% prior); Wholesale inventories month-over-month, October (+0.8% prior); Initial jobless claims, week ending Nov. 23 (213,000 prior); Pending home sales month-over-month (7.4% prior)
Earnings: No notable earnings releases.
Thursday
Markets are closed for the Thanksgiving holiday.
Friday
Economic data: MNI Chicago PMI, November (41.6 prior)
Earnings: No notable earnings releases.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
32.
Is This Outstanding Index ETF a Millionaire-Maker?
2024-11-23 11:08:00 by Jake Lerch, The Motley Fool from Motley FoolThere's nothing wrong with keeping things simple. Consider, for example, how a recipe can be ruined by straying too far from its original list of ingredients -- nobody wants a milkshake made with a heaping helping of brussels sprouts, right?
Similarly, investing doesn't have to be complicated. Indeed, by allocating large portions of a portfolio to funds that track major indexes, investors can feel secure knowing that their portfolio will largely capture the stock market's growth.
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Let's have a closer look at one excellent index-linked exchange-traded fund (ETF) and see if it could be a millionaire-maker.
What is the Invesco QQQ Trust Series I ETF?
In the simplest terms, the Invesco QQQ Trust Series I ETF (NASDAQ: QQQ) is an index-linked ETF that tracks the Nasdaq 100 index. That index, in turn, is made up of the 100 largest non-financial stocks that are listed on the Nasdaq stock exchange.
Many of the stocks in the index are the mega-cap tech stocks you might expect to find: Nvidia, Microsoft, Apple, and Amazon. However, there are also much smaller, less well-known names like Ansys, MongoDB, and The Trade Desk. Finally, there are also companies from outside the tech sector, such as Starbucks, Kraft Heinz, and AstraZeneca.
All in all, this fund offers investors the opportunity to own a broad array of stocks representing many sectors (except for financials). Granted, the index is heavily skewed toward the tech industry, with roughly 59% of holdings falling within that sector.
Yet, given tech's outperformance over the last few decades, investors should ask themselves: Is it a bad thing to be relatively overweight in the tech sector over the long term? I would suggest -- particularly for younger investors -- that it is not. In fact, staying slightly overweight in the tech sector could prove to be a millionaire-making move. Here's why.
Large investments in the tech sector have paid off
Let's compare the relative performance across four index-linked ETFs: The Invesco QQQ Trust Series I, the SPDR S&P 500 ETF Trust, the SPDR Dow Jones Industrial Average ETF, and the iShares Russell 2000 ETF.
As you can see, over the last five years, the Invesco fund has significantly outperformed the other funds with a compound annual growth rate (CAGR) of 20.5%.
What's more, the difference is even more pronounced if we examine the last 15 years -- starting with the end of the Great Recession bear market, which occurred in March 2009.
Indeed, $50,000 invested in the Invesco fund in March 2009 would have grown to over $1 million today. In comparison, the same amount, invested on the same day, would have grown to only $560,000 in the S&P 500 fund, $454,000 in the Dow fund, and less than $386,000 in the Russell fund.
The lesson? Even with near-perfect timing and very similar index-linked ETF funds, there is an enormous amount of difference in performance among these funds -- and the tech-heavy Invesco fund has proven to be the best.
All that said, there is no guarantee that the Invesco fund will continue its outperformance. After all, there were periods, such as the dot-com bubble of 2001-2003, where tech stocks severely underperformed the broader market. However, even with that turbulent period included, the Invesco fund has ever-so-slightly exceeded the performance of its major index rivals since the start of this century.
No investment is a sure thing, but index-linked ETFs are about as close as you can find. They offer investors a broad range of stocks and have a proven track record of delivering real returns over decades. Moreover, the tech-heavy nature of the Invesco fund offers investors a realistic chance to outperform the market, given the high growth and solid profitability of many of its major components. Investors looking for a smart and simple way to grow their portfolio to over $1 million should consider the Invesco fund.
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33.
Jobless claims fall to 7-month low, show labor market 'trending sideways at a healthy level'
2024-11-21 14:36:31 by Josh Schafer from Yahoo FinanceWeekly jobless claims rose less than expected last week, reaching a seven-month low, as the impact of labor strikes and severe weather has made weekly data noisy over the last few months.
New data from the Department of Labor showed 213,000 initial jobless claims were filed in the week ending Nov. 16, down from 219,000 the week prior and below the 220,000 economists had expected.
The weekly unemployment claims have been falling steadily throughout the past several weeks after hitting their highest level in more than a year in October.
Meanwhile, the number of continuing applications for unemployment benefits hit 1.9 million, up 36,000 from the week prior and the highest level since November 2021.
"The weekly claims report remains the best real-time monitor of labor market conditions," Jefferies US economist Thomas Simons wrote in a note to clients on Thursday. "Right now, the data show that the labor market is trending sideways at a healthy level."
Recent labor market data has been a mixed bag due to labor strikes and hurricanes, both of which weighed on October's Jobs report, which showed the US economy added just 12,000 jobs in the month.
With hurricanes no longer factored in to the weekly tally of claims, the data shows a labor market with low layoffs that "still looks robust," EY chief economist Gregory Daco wrote on X on Thursday.
Weakness in the labor market had been a concern through the summer and into the fall as jobless claims picked up along with a rise in the unemployment rate and a decline in monthly job gains. This data contributed to the Fed's calculus when cutting interest rates by half a percentage point in September.
But since then, labor market data has come in better than expected with the unemployment rate falling from a peak of 4.3% to 4.1%, and Fed officials have talked about a slower path for interest rate cuts.
On Wednesday, Federal Reserve governor Michelle Bowman expressed concern that the Fed’s progress toward 2% inflation has “stalled” and the central bank should proceed "cautiously" when lowering interest rates.
"I see greater risks to the price stability side of our mandate, especially while the labor market remains near full employment," Bowman said.
As of Thursday morning, markets were pricing in a roughly 56% chance the Federal Reserve cuts interest rates at its next meeting in December, per the CME FedWatch Tool.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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34.
ETFs Brace for Nvidia's Big Earnings Report
2024-11-19 14:00:00 by Sumit Roy from etf.com
The last of the Magnificent Seven is set to report earnings this week, and there is a lot riding on the outcome.
Nvidia, the AI chip giant that has powered tech stocks to enormous gains this year, is set to report its latest earnings results after the bell on Wednesday.
The company is expected to announce that it earned $0.74 per share on $33.2 billion of revenue during Q3, according to Bloomberg’s consensus of analyst estimates.
However, investors will likely be looking for Nvidia to handily exceed those numbers. During the last five quarters, Nvidia earnings have topped analyst revenue estimates by anywhere from $1.2 billion to $2.5 billion.
For a stock that’s nearly tripled this year, a beat of a similar magnitude is likely a requirement if investors are to be rewarded with even larger gains.
Guidance for Q4 is also crucial; analysts currently expect revenues of $37.1 billion for the final quarter of the year, but investors are likely betting that Nvidia will forecast a figure that’s well above that.
Nvidia Earnings & Big Weightings in ETFs
Given that pretty much everyone is a big investor in Nvidia these days—the stock has a 7% weighting in the S&P 500 and is the world’s largest publicly traded company by market cap—there is a lot riding on this week’s earnings report.
For investors who hold more concentrated positions in the stock, the stakes are even higher. Nvidia has a 9% weighting in the Invesco QQQ Trust (QQQ) and a 24% weighting in the VanEck Semiconductor ETF (SMH).
And of course, investors in the GraniteShares 2x Long NVDA Daily ETF (NVDL)—which has nearly $6 billion in assets under management—are the most levered to the stock of all.
In addition to Nvidia’s earnings results and guidance, investors will key in on the company management’s commentary on the ramp-up in sales of its newest Blackwell line of AI chips.
Companies including OpenAI, Meta, and others are counting on the chips to power their next generation of powerful AI models.
35.
Wall Street strategists aren't relying on AI to drive the stock market rally anymore: Morning Brief
2024-11-19 11:00:48 by Josh Schafer from Yahoo FinanceThis is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
The early results are in and Wall Street strategists issuing 2025 forecasts see the S&P 500 (^GSPC) rally chugging along over the next 12 months.
But missing from their baseline calls is one of the most popular themes of the past 18 months in markets: artificial intelligence.
AI driving the market higher has been a hallmark of market calls dating back to the spring of 2023 when Nvidia's first blowout earnings report of the cycle kickstarted a roaring bull market rally.
On Monday, BMO Capital Markets chief investment strategist Brian Belski initiated a 2025 year-end target of 6,700 for the S&P 500. Meanwhile, Morgan Stanley chief investment officer Mike Wilson issued a 12-month target of 6,500.
Neither leaned too far into the impact of AI driving stocks higher — perhaps a sign of a maturing bull market — and instead, both discussed further broadening of the rally away from the tech-concentrated stock market of the past two years.
"We expect this broadening in earnings growth to continue as the Fed cuts rates into next year and business cycle indicators continue to improve," Wilson wrote.
Belski's work shows the market has already broadened, with 276 stocks outperforming the S&P 500 in the second half of 2024 — better than the 10-year average of 238 and above the number seen since the start of 2023.
At the surface this can lead to weaker gains for the index, as smaller gains in small companies make for smaller overall gains. Dating back to 1990, Belski found that when the top 100 stocks in the S&P 500 outperform, the index delivers an average annual return of 11.8% compared to the average return of 8% when those stocks underperform the index.
In other words, the returns aren't bad; they're just not as great as the ones investors have enjoyed for two years now.
To be clear, the idea that an AI-related fever could keep driving stock prices higher hasn't been forgotten among Wall Street strategists. Just two weeks ago, Evercore ISI's Julian Emanuel wrote that he sees the S&P 500 reaching 6,600 by June 2025 as "exuberance lies ahead" amid a "public reengaged in speculation."
Wilson did offer a bull case in which wide AI adoption juices margins — and pushes the flagship index near 7,400.
For any investor in the S&P 500, that of course sounds like an appealing scenario. But perhaps even more appealing is that strategists no longer need to rely on AI to explain why the market will keep moving higher. Even if AI doesn't show up to the party, Wall Street expects a good time.
It's a stark contrast from where things stood in 2023, when AI mentions first started littering S&P 500 target changes across Wall Street and the macro backdrop was much more bleak. Recession fears were still common among economists. The other 493 S&P 500 stocks were still in an earnings recession. And speculation around the Fed centered on how much more they'd hike interest rates, not cut them.
While those debates could resurface at any moment, we've made it to the other side of all those rungs on the wall of worry. And for now, Wilson's base case is driven by a backdrop where the broadening of earnings rolls on as the Fed cuts rates and business cycle indicators continue to improve.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
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36.
Wall Street forecasts 'normal' year for stocks in 2025 after historic rally
2024-11-18 18:21:24 by Josh Schafer from Yahoo FinanceAfter two years of annual gains north of 20% for the S&P 500 (^GSPC), Wall Street strategists think 2025 will see a more measured year for stocks.
On Monday, BMO Capital Markets chief investment strategist Brian Belski initiated a 2025 year-end target of 6,700 for the S&P 500. On Sunday, Morgan Stanley chief investment officer Mike Wilson issued a 12-month target of 6,500 for the S&P 500.
Belski's target reflects about 14% upside from Friday's close; the strategist already has a 6,100 year-end target for 2024. This puts Belski's forecast for returns in 2025 at 9.8%, right in line with the index's average historical gain. Wilson's 12-month target represents a nearly 11% increase for the benchmark index over the next year.
Should the S&P 500 finish 2024 with a gain above 20%, it would mark the first time the benchmark index has posted consecutive years with gains of 20% or more since the tech bubble of 1998-1999.
Any way you slice it, then, these outlooks say the outsized returns the S&P 500 has enjoyed for each of the past two years will come to an end in 2025.
"It is clearly time for markets to take a somewhat of a breather," Belski wrote.
"Bull markets can, will and should slow their pace from time-to-time, a period of digestion that in turn only accentuates the health of the underlying secular bull. So we believe 2025 will likely [be] defined by a more normalized return environment with more balanced performance across sectors, sizes, and styles."
Belski points out that the historical pattern for bull markets sees returns in year three come in below gains for the first two years and below the index's typical average return.
"Now that inflation, interest rates (zero percent is NOT normal) and employment are showing signs of stabilizing (volatility diminishing), US stock fundamentals have their best chance to normalize," Belski wrote.
"According to our work, an environment of high single digit annual price gains coupled with at or near double digit earnings growth and price to earnings ratios in the high teens to low twenties over the next few years would be a good start on the path to normalization."
With the Federal Reserve cutting interest rates while US economic growth remains strong, both Belski and Wilson believe in a continued broadening of the stock market rally, where more than just a few high-flying tech names are driving the market action.
"We expect this broadening in earnings growth to continue as the Fed cuts rates into next year and business cycle indicators continue to improve," Wilson wrote. "A potential rise in corporate animal spirits post the election could catalyze a more balanced earnings profile across the market in 2025."
Wilson and Belski agree that this likely creates stock-picking opportunities beneath the surface of the S&P 500.
But it could also be part of what leads to lower returns at the index level, with smaller stocks by definition having less of an impact on the movement of the overall index.
"We believe the slight [second half of 2024] rotation out of technology+ mega cap stocks is a trend that will likely continue and if so, the sheer size of the stocks within the index will make big market gains more difficult (but not impossible) to achieve as the rest of the S&P 500 plays the catch-up game," Belski wrote.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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37.
ETFs Investors Have Been Buying Since the Election
2024-11-18 14:00:00 by Sumit Roy from etf.com
It’s been a little over a week since investors found out that Donald Trump would be the next president of the United States. Since then, stocks have rocketed higher, while bonds have retreated.
In general (Friday’s pullback notwithstanding), investors have been feeling good about their investments and the prospects for the economy and financial markets going forward.
That enthusiasm is reflected in ETF inflows, which surged to a new annual record last week thanks to $46 billion of inflows just over the past five trading sessions.
It raises the question, though: where have investors been putting money to work in ETFs since the election?
ETF Giants Have Earned Billions Post-Election
The answer to that question probably won’t surprise you. Familiar ETF giants, like the Invesco QQQ Trust (QQQ), the SPDR S&P 500 ETF Trust (SPY), and the Vanguard S&P 500 ETF (VOO) have gathered billions of dollars of new assets over the past week.
The iShares Russell 2000 ETF (IWM), which surged 6% the day after the election, has also been a big flows winner.
Small cap ETFs like IWM, along with financials ETFs like the Financial Select Sector SPDR Fund (XLF)—another top asset-gatherer—are expected to benefit from the Trump administration’s deregulation agenda.
So, too, is the cryptocurrency industry: bitcoin has skyrocketed since the election and the iShares Bitcoin Trust ETF (IBIT) has seen enormous inflows in that period.
One of the lesser-known ETFs to see strong demand in the wake of the election is the JPMorgan Global Select Equity ETF (JGLO), an active ETF that focuses on global companies with high-quality earnings growth and lower valuations.
The Invesco S&P 500 Low Volatility ETF (SPLV) is another lower-profile ETF to sneak into the top inflows group.
Finally, some investors are just happy to ride the wave. Two momentum ETFs, the iShares MSCI USA Momentum Factor ETF (MTUM) and the Invesco S&P 500 Momentum ETF (SPMO), were among the top flows winners since the election.
38.
Stock rally stumbles with Nvidia earnings on tap: What to know this week
2024-11-17 12:38:51 by Josh Schafer from Yahoo FinanceThe feverish post-election stock market rally came to a screeching halt last week.
For the week, the S&P 500 (^GSPC) fell more than 2%, while the Dow Jones Industrial Average (^DJI) shed more than 500 points or nearly 1.3%. The tech-heavy Nasdaq Composite (^IXIC) sank over 3%.
Two firm inflation readings and commentary from Federal Reserve Chair Jerome Powell weighed on markets last week, with growing uncertainty over the Fed's rate path outweighing previous investor excitement over Trump's potential policy agenda.
In the week ahead, a few economic data releases are expected to add to that narrative, with activity in the services and manufacturing sector and a consumer sentiment reading headlining the schedule.
Earnings, however, will bring attention back to some of the biggest names in the corporate world after a few weeks of macro and political events dominating investor mindshare.
Key among these reports will be earnings from AI leader Nvidia (NVDA), which is set to report results after the bell on Wednesday. Quarterly results from Walmart (WMT), Target (TGT), BJ's (BJ), and Deere & Company (DE) will also be in focus.
A pause in the rally
Since the Federal Reserve slashed its benchmark interest rate by half a percentage point on Sept. 18, bond yields have ripped higher. The 10-year Treasury (^TNX) yield rose by 80 basis points between that date and the days following the election to trade near 4.5%.
That move in rates hadn't been an issue for the stock market rally until last week.
While strategists have pointed out that a move higher in rates supported by stronger-than-expected economic growth could be welcome news for stocks, recent inflation data has thrown a wrench in that thesis.
On Wednesday, the "core" Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices increased 3.3% annually for the third consecutive month during October. On Thursday, the "core" Producer Price Index (PPI) revealed prices increased by 3.1% over last year in October, up from 2.8% the month prior and above economist expectations for a 3% increase.
Later on Thursday, Powell said in a speech the Fed doesn't need to be "in a hurry" to lower interest rates given the strength of the US economy. Markets moved lower on the comments, and the selling continued on Friday, with the Nasdaq Composite sliding more than 2.2% for the session.
"Slower progress on inflation in recent months may prompt the Fed to reevaluate its pace of easing moving forward," Wells Fargo's economics team led by Jay Bryson wrote in a weekly note to clients on Friday.
As of Friday afternoon, investors were pricing in a 58% chance the Fed cuts interest rates by 25 basis points at its December meeting, down from the nearly 86% chance seen a month ago, per the CME FedWatch Tool.
Schwab Asset Management CEO and chief investment officer Omar Aguilar told Yahoo Finance Powell's comments and the Fed debate add uncertainty and "additional volatility and, therefore, the opportunity for investors to take something off the table and take some profits."
All eyes on Nvidia
Amid all the macro headlines influencing the stock market in November, S&P 500 companies have posted solid third quarter earnings.
The S&P 500 has grown earnings by 5.4% compared to the same quarter a year prior, marking the fifth straight quarter of earnings growth, per FactSet data. And one of the index's largest contributors to that expected growth is slated to report earnings this week.
Nvidia is expected to report earnings per share of $0.74 on revenue of $33.21 billion, according to Bloomberg consensus data. Both metrics would represent more than 80% growth compared to the same period a year prior.
"We expect a similar story to the last several quarters with a beat and raise in the $2B range [for current quarter revenue guidance]," Jefferies analyst Blayne Curtis wrote in a research note previewing the release.
Curtis noted that expectations have continued to "creep higher" as Nvidia shares have rallied more than 7% in the past month and are up more than 180% this year. But Curtis believes the stock "continues to work" as Nvidia continues with the release of its latest AI chip, Blackwell.
Given Nvidia's large weighting in the S&P 500, its earnings for the past couple of quarters have been viewed as a key catalyst for the market's overall direction.
And while investors will be listening for any clues about which Big Tech companies continue to spend with the AI chip leader, the actual price action of Nvidia's stock after earnings hasn't been a barometer for broader market performance in the near term.
For example, Nvidia's (NVDA) August earnings release did little to impress investors and the stock fell about 6% the day after its earnings release.
But that sour sentiment didn't permeate through the market as the S&P 500 closed flat on that same day. This marked the second straight quarter that the broader S&P 500 didn't move with Nvidia following its earnings release.
The other side of the Trump trade
Some of the biggest winners in the market since Donald Trump won the presidential election on Nov. 5 have reversed course.
The Nasdaq 100 (^NDX) has given back nearly all of its gains. The S&P 500 closed Friday below where it opened the day after the election. And the small-cap Russell 2000 (^RUT) index, which soared more than 9% following Trump's victory, has now given back about half of those gains.
For small caps, the story isn't much different than a week ago, when we noted Piper Sandler chief investment strategist Michael Kantrowitz's concern about earnings momentum for companies in the index.
"In the last 20 days ... we've definitely seen small cap estimates at the margin move pretty sharply lower," Kantrowitz said. He added that investors would want to see earnings accelerating to signal the start of a recovery.
"[It's] not something we're seeing quite yet," Kantrowitz said. "So something we'll be monitoring."
The move in small caps is emblematic of the uneven trading action in the two weeks following the election, as any impact from the Trump administration's policies largely remains to be seen.
"Key economic positions have not been announced, and we remain in a policy uncertainty backdrop," Citi US equity strategist Scott Chronert wrote in a note to clients when explaining the recent drawdown in the market rally.
"We are working from euphoric sentiment levels and implicit growth expectations at post-2008 highs," he added. "Overall, there is a lot of pressure on macros and fundamentals to deliver, which may explain some recent profit taking after a rapid post-election run."
Weekly calendar
Monday
Economic data: NAHB housing market index, November (42 expected, 43 previously)
Earnings: Trip.com (TCOM)
Tuesday
Economic data: Housing starts month-over-month, October (-1.4% expected, -0.5% previously); Building permits, month-over-month, October (1.2% expected, -3.1% previously)
Earnings: Lowe's (LOW), Walmart (WMT), XPeng (XPEV)
Wednesday
Economic data: MBA mortgage applications, Nov. 15 (0.5% prior)
Earnings: Nvidia (NVDA), Jack In The Box (JACK), NIO (NIO), Palo Alto Network (PANW), Snowflake (SNOW), Target (TGT), TJX (TJX), Williams-Sonoma (WSM)
Thursday
Economic data: Initial jobless claims, week ending Nov. 16 (217,000 previously); Leading index, October (-0.3% expected, -0.5% previously); Existing home sales month-over-month, October (+2.3% expected, -1% previously); Kansas City Fed manufacturing activity, November (-4 previously)
Earnings: Baidu (BIDU), BJ's (BJ), Deere & Company (DE), Gap (GAP), Intuit (INTU), Ross Stores (ROST), Warner Music Group (WMG)
Friday
Economic data: S&P Global US manufacturing PMI, November preliminary (48 expected, 48.5 previously); S&P Global US services PMI, November preliminary (55 expected, 55 previously); S&P Global US Composite PMI, November preliminary (54.1 previously); University of Michigan consumer sentiment, November final (73 expected, 73 previously)
Earnings: No notable earnings releases.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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39.
2024 ETF Inflows Reach New Record High
2024-11-15 00:18:49 by Sumit Roy from etf.com
It took three years, but annual ETF inflows are back at record levels. On Tuesday, year-to-date inflows for U.S.-listed ETFs topped $902 billion—and then on Wednesday, they breached $909 billion.
That means that, with a month-and-a-half left in the year, 2024 inflows are tracking to end up comfortably ahead of the previous annual record of $900 billion set in 2021.
Of course, it’s still possible that ETFs could register outflows from now through December, putting inflows below $900 billion at the end of the year—but it seems very unlikely.
Inflows have been robust all year long, and recent enthusiasm in the stock market following the U.S. presidential election suggests that December will be a strong month for inflows.
ETF Inflows Could Top $1T in 2024
In fact, if trends persist, an annual inflows record of more than $1 trillion seems to be in the cards, with an outside shot at $1.1 trillion.
In addition to being a new record, such a haul would be a sharp acceleration compared to the roughly $600 billion of inflows seen in both 2022 and 2023.
A buoyant stock market, a plethora of new product launches, and the rise of active ETFs have all contributed to the surge of interest in exchange-traded funds this year.
VOO Record
Another inflows milestone that etf.com has been watching is the $100 billion mark for the Vanguard S&P 500 ETF (VOO).
Earlier this year, the ETF broke the calendar-year inflows record for an individual ETF when it surpassed $47 billion in inflows. It’s since almost doubled that haul, bringing year-to-date inflows up to $93 billion, according to etf.com’s Fund Flows tool.
The ETF has pulled in about $17 billion of new money over the past month, a pace that if maintained, means that VOO will easily crack $100 billion by year end.
In other words, 2024 could be the first trillion-dollar year for ETFs as a whole and the first $100 billion year for a single ETF.
40.
2 firm inflation prints just made the Fed's 2025 rate cut path a lot 'murkier'
2024-11-14 16:00:13 by Josh Schafer from Yahoo FinanceOctober inflation readings out this week have shown little progress toward the Fed's 2% inflation target, putting into question how deeply the Federal Reserve will cut interest rates in 2025.
On Wednesday, the "core" Consumer Price Index (CPI), which strips out the more volatile costs of food and gas, showed prices increased 3.3% for the third consecutive month during October. Then, on Thursday, the "core" Producer Price Index (PPI) revealed prices increased by 3.1% in October, up from 2.8% the month prior and above economist expectations for a 3% increase.
Taken together, the readings are adding to an overall picture of persistent, sticky inflation within the economy. Economists don't see the data changing the Fed's outlook come December. And markets agree with the CME FedWatch Tool currently placing a nearly 80% chance the Fed cuts rates by 25 basis points at its December meeting.
But the lack of recent progress on the inflation front could prompt the Fed to adjust its Summary of Economic Projections (SEP), which had forecast the central bank would cut interest rates four times, or by one percentage point in total, throughout 2025.
"PPI won’t decisively alter the Fed’s easing bias, but it makes charting the policy outlook murkier," Nationwide financial market economist Oren Klachkin wrote in a note to clients today. "We anticipate 75 [basis points] of cumulative Fed easing in 2025, but risks seem to be tilting toward a more gradual pace of easing."
"Their bias is toward cutting, but they'll probably have to have to go at a slower pace next year," Wolfe Research chief economist Stephanie Roth told Yahoo Finance (video above).
Markets have quickly shifted over the past two months to reflect this sentiment. On Sept. 18, when the Fed slashed rates by half a percentage point, markets had projected the Fed would finish 2025 with a federal funds rate around 3%. Now, the market is pricing in about 80 fewer basis points of easing next year.
This speculation has also prompted a large increase in bond yields over the past month. The 10-year Treasury yield (^TNX) has added about 80 basis points since the Fed's first rate cut in September. But that in itself hasn't proven to be a headwind for the stock market rally, as all three indexes are within striking distance of new record highs. Investors have attributed the market's resilience to stronger-than-expected economic data flowing in as bond yields rise.
"The reason it hasn't hit the stock market is very simply because if the yield is rising, partly because growth is going to be stronger, that effect is going to be stronger on the stock market," Bridgewater Associates co-chief investment officer Karen Karniol-Tambour said at the Yahoo Finance Invest conference.
At his most recent press conference on Nov. 7, Fed Chair Jerome Powell said inflation continues to come down on a "bumpy path" but declined to provide forward guidance on the Fed's path.
"We don't know the right pace, and we don't know exactly where the destination [of rates] is," Powell said. "So the point is to find that, to find the right pace and the right destination as we go. And I think there's a fair amount of uncertainty about that. "
But economists are taking hints from recent trends within the inflation prints. The three-month annualized rate of core inflation moved from 3.1% last month to 3.6% after the October CPI release. This underscores the recent lack of progress toward the Fed's 2% goal. Add the potential inflationary economic policies expected from President-elect Donald Trump, and the picture becomes even more uncertain.
"The inflation data over the past few months have not shown much additional progress, and the election outcome has raised new questions about the path ahead for price growth," Wells Fargo senior economist Sarah House wrote in a note to clients. "We think the time is fast approaching when the FOMC will signal that the pace of rate cuts will slow further, perhaps to an every-other-meeting pace starting in 2025."
Economists use the data from CPI and PPI to project a reading from the "core" Personal Consumption Expenditures (PCE) index, the Fed's preferred inflation gauge. Bank of America US economist Stephen Juneau believes that release, due out at the end of November, will show core prices rose 2.8% in October, up from 2.7% in September.
"If our forecast proves correct, it will mark two consecutive uncomfortably high prints as the Fed seeks to return inflation to its 2% target," Juneau wrote in a note to clients on Thursday.
He added this doesn't mean markets should "panic." Some of the factors driving inflation higher in October, like financial services and airfares, aren't expected to last. Additionally, inflation expectations remain low, and the labor market no longer appears to be a cause of concern on the inflation front.
Still, Juneau, like other economists, argues the recent data shows "the risk appears to be tilting toward a shallower cutting cycle given resilient [economic] activity and stubborn inflation."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
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41.
ETF Inflows on Cusp of Annual Record
2024-11-12 23:56:27 by Sumit Roy from etf.com
Exchange-traded fund inflows are on the cusp of breaking their annual record after investors piled into ETFs following Trump’s election victory.
Year-to-date inflows for U.S.-listed ETFs stood at $892 billion as of Monday, Nov. 11, just a tad short of the $900 billion mark reached in 2021.
With over a month-and-a-half left in the year, the record is almost certain to fall—possibly as soon as this week.
After that, attention will shift to the symbolic $1 trillion level, which suddenly looks achievable by year's end.
Last December, inflows for U.S.-listed ETFs were well over $100 billion; this year, with investor sentiment surging in the wake of the election, it’s conceivable that Dec. 2024 inflows could be just as strong, or even stronger.
ETF Inflows Could Soon Hit $1T Mark
Meanwhile, another milestone that could be reached by year's end is the $100 billion flows mark for an individual ETF.
Since the start of the year, the Vanguard S&P 500 ETF (VOO) has gathered $90 billion of new assets, the largest haul by far for a single ETF in a calendar year. Over the past month, inflows of VOO have totaled $13 billion, suggesting that the fund has a good shot to hit $100 billion of inflows by the end of 2024.
VOO’s inflows are significantly higher than the $56 billion that’s been invested in the iShares Core S&P 500 ETF (IVV) since the start of the year.
New Global Record
Speaking of records, while we tend to focus on the U.S. ETF industry here at etf.com, the ETF structure remains popular around the world. Data from BlackRock shows that worldwide ETF inflows hit an annual record at the end of October— $1.4 trillion versus the previous $1.33 trillion record from 2021.
While the U.S. drove much of those inflows, strong demand for exchange-traded funds in Europe has also contributed.
42.
Trump Presidency Puts Markets on Bullish Path
2024-11-11 22:57:20 by Jeff Benjamin from etf.com
The post-election stock market rally that has been dubbed the “Trump trade” has the potential to extend well into next year, according to some market watchers.
Beyond the initial market pop driven by investors interpreting the election of Republican Donald Trump as bullish for markets, Aniket Ullal, head of ETF research at CFRA, anticipates a more business-friendly environment under Trump.
“This is generally bullish for ETFs,” Ullal said. “One of the factors driving the initial rally is the expectation of less regulations around financials and energy, but there are also expectations that the strength of the stock market could broaden into small- and mid-cap stocks.”
Jay Hatfield, chief investment officer at Infrastructure Capital in New York City, also sees a Trump presidency as bullish for smaller U.S. companies.
Small Caps Could See Bullish Path Ahead
“This is definitely bullish for small caps, but it is really more about specific sectors than market capitalization,” he said.
Hatfield noted that it is a common misconception that smaller companies in general are more leveraged and therefore more interest rate-sensitive.
“Smaller companies are de facto interest rate sensitive because the sectors of the index tend to be lower in technology and higher in financials and real estate and other companies that do better when we’re not in Fed tightening cycle,” he said. “But right now, we’re in a Fed loosening cycle, and we’re more optimistic about rates than the market because we think most of Trump’s policies are disinflationary.”
One of the shifts Hatfield expects under Trump is a Federal Trade Commission that will encourage consolidation.
“The most important thing to think about is that small companies are acquisition targets, but the FTC has been putting a lid on consolidation,” Hatfield said.
Then, there is the potential for a reduced corporate tax rate, down to 15% from the current 21%.
“There will be a new tax bill, and a corporate tax reduction will be in that bill,” said Hatfield, who expects the S&P 500 Index to gain 25% next year.
“And we think small caps will beat that 25%,” he added.
Ullal said the initial rally of financial sector stocks following last week’s election was in response to a more relaxed regulatory environment, considering the Republican track record of being “less hawkish on antitrust action.”
Another factor supporting small-cap stocks is the valuation levels of large-cap stocks, illustrated by the S&P 500’s forward price-to-earnings ratio of 22.3, compared to a historical average of 16.
Small- and mid-cap stocks, meanwhile, have forward p/es of around 17, which is in line with their historical averages.
“Large caps are already richly valued,” Ullal said. “That can continue for some time, but at some point, we may hit a ceiling.”
43.
S&P 500 seen reaching 10,000 by end of decade, spurred by 'animal spirits'
2024-11-11 21:23:41 by Josh Schafer from Yahoo FinanceThe S&P 500's (^GSPC) surge to record highs since Donald Trump won the 2024 presidential election is showing no signs of stopping.
And Wall Street strategists have been quick to update their outlooks on where stocks may be headed next.
On Monday, Yardeni Research president Ed Yardeni wrote in a note to clients that he expects the S&P 500 to hit 6,100 by the end of 2024, about 2% above current levels.
Yardeni then sees the index reaching 7,000 by the end of 2025, 8,000 by the end of 2026, and 10,000 by the end of the decade. Previously, Yardeni told Yahoo Finance he'd seen the S&P 500 hitting 8,000 by the end of the decade.
"We're just seeing a more pro-business administration coming in that undoubtedly will cut taxes," Yardeni told Yahoo Finance. "And not only for corporations but also for individuals. Lots of various kinds of tax cuts have been discussed. And in addition to that, a lot of deregulation."
In his note, Yardeni wrote the market is showing early signs of "animal spirits" coming into play.
Key to Yardeni's call is a boost to his earnings estimates and margin projections for the S&P 500 due to Trump's policies. The earnings estimates assume Trump will "quickly lower the corporate tax rate from 21% to 15%."
Yardeni's decade-end forecast would mark a return of about 66% from current levels, or about 11% annually, roughly in line with the long-term average annual return of the S&P 500.
There are concerns, like sticky inflation readings, which may prompt investors to question whether the Federal Reserve will stop cutting interest rates.
And others, like the team at Goldman Sachs — which recently called for a 3% annual return for the S&P 500 over the next decade — have reasoned that, eventually, the bull market will turn into a bear.
"We aren't saying that a recession can't occur over the rest of the decade," Yardeni wrote in his note to clients. "However, we note that despite the significant tightening of monetary policy during 2022 through 2024, there has been no recession. Why should there be one over the remainder of the Roaring 2020s?"
Research from FactSet on Friday, showed the S&P 500 is already trading at 22.2 times 2025 earnings estimates. This is above the five-year average of 19.6 and the 20-year average of 15.8.
High valuations and frothy sentiment are among the reasons some have argued the market could be due for a correction, or at least more modest returns going forward.
But strategists often point out that high valuations on their own aren't often a reason to sell. "Multiples are likely to be elevated when investors believe that earnings can grow faster for longer because a recession is less likely in the foreseeable future," Yardeni wrote.
And as Evercore's Julian Emanuel wrote recently when making the case for the S&P 500 to hit 6,600 by June 2025, "Expensive has a history of getting more expensive and lasting longer with greater gains."
He added, "Exuberance lies ahead. President-Elect Trump will move fast on policy initiatives, and stocks will move fast in response."
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
44.
Inflation and retail sales data greet a roaring stock market rally: What to know this week
2024-11-10 12:45:52 by Josh Schafer from Yahoo FinanceStocks just had their best week of 2024.
All three major indexes pressed to record highs after Donald Trump won the 2024 presidential election.
For the week, the S&P 500 (^GSPC) and the Dow Jones Industrial Average (^DJI) rose more than 4.5%, while the Nasdaq Composite (^IXIC) rose nearly 6%.
In the week ahead, a fresh reading on inflation and retail sales will lead the economic calendar.
In corporate news, quarterly results from Home Depot (HD), Cisco (CSCO), and Disney (DIS) will highlight another week of earnings reports.
Price check
In a widely anticipated move, the Federal Reserve cut interest rates by 25 basis points last Thursday. In a press conference following the announcement, Fed Chair Jerome Powell declined to comment on the central bank's plans for future rate cuts.
"We don’t think it’s a good time to be doing a lot of forward guidance," Powell said. He later noted that Fed officials will need to gauge the economic data released between now and December before knowing if the central bank will cut interest rates again this year.
The first data the Fed will consider ahead of its next meeting will come out on Wednesday with the release of the October Consumer Price Index (CPI). Wall Street economists expect headline inflation rose just 2.6% annually in October, an increase from the 2.4% rise in September. Prices are set to rise 0.2% on a month-over-month basis, per economist projections, in line with the increase seen in September.
On a "core" basis, which strips out food and energy prices, CPI is forecast to have risen 3.3% over last year in October, unchanged from September's increase. Monthly core price increases are expected to clock in at 0.3%, also in line with the September gain.
"The October CPI report will likely support the notion that the last mile of inflation's journey back to target will be the hardest," Wells Fargo's economics team led by Jay Bryson wrote in a weekly note to clients on Friday.
Retail reading
The final monthly retail sales report before the start of the holiday shopping season is set for release on Thursday. Economists estimate retail sales increased 0.3% over the prior month during October. The control group of retail sales — which excludes several volatile categories like gasoline and feeds directly into gross domestic product (GDP) — is also expected to have risen by 0.3%.
Entering the release, several trackers point to the fourth quarter being off to a solid start for economic growth. The Atlanta Fed GDPNow tracker currently projects the US economy growing at 2.5%.
Disney on the big screen
Disney is set to report quarterly results before the bell on Thursday as the media giant looks to continue to improve its streaming business amid further declines in linear television. Investors will also be focused on results within the company's theme park business after the segment fell short in its most recent quarter.
Streaming profitability should be a bright spot after the company reported its first quarter of profits for that business in August. The segment should get a boost from recent price hikes along with the continued rollout of Disney's password-sharing crackdown across its various platforms.
Shares are up about 9% this year.
Trump trade lifts Big Tech
In a roaring rally over the final three trading sessions of the week, much has been made about trades like financials that could benefit from President-elect Donald Trump's policy.
Big Tech also saw significant upside. Roundhill's Magnificent Seven ETF (MAGS) — which tracks Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) — hit a fresh record highs on both Thursday and Friday.
Three of the Magnificent Seven stocks, Tesla, Nvidia, and Amazon, outpaced the S&P 500 on the week, with Alphabet also coming close. Tesla had a unique Trump-related catalyst, with investors banking on CEO Elon Musk's big bet on the president-elect's campaign paying off.
Broadly, markets seemed to be pricing in the potential for less government regulation over Big Tech in a second Trump term. Perhaps indicative of the tech industry's high hopes, Amazon founder Jeff Bezos, Microsoft’s Satya Nadella, Meta’s Mark Zuckerberg, and Alphabet CEO Sundar Pichai all rushed to congratulate Trump on his victory.
The week's stock moves also coincided with a surge in Treasury yields, with the 10-year Treasury yield (^TNX) nearly hitting 4.5%. Strategists have often cited a "flight to quality" environment when yields rise, where money flows to large corporations with solid earnings growth and healthy balance sheets. Big Tech fits this mold and saw a rally when yields rose back in the spring.
Small-cap resurgence
Small caps were one of the beneficiaries of the post-Trump election rally. The Russell 2000 (^RUT) small-cap index jumped more than 5% on Wednesday for its best day in nearly two years. It closed the week up more than 8% for its best week since April 2020 and is now closing in on its all-time high.
This leaves investors with a question that's been prompted throughout 2024: With the Fed set to keep lowering interest rates, is now the time to pile into small caps? In a Friday webinar, Piper Sandler chief investment strategist Michael Kantrowitz said not yet.
The index has more short-term debt than the S&P 500 and would be a clear beneficiary of lower interest rates. But it also has another key difference from large-cap indexes right now: Earnings estimates aren't rising.
While Kantrowitz's research shows 2024 full-year earnings estimates for the S&P 500 have increased over the last 90 days, earnings estimates for the small-cap S&P 600 (^SP600) index have been falling.
"In the last 20 days ... we've definitely seen small cap estimates at the margin move pretty sharply lower," Kantrowitz said.
He added that investors would want to see earnings accelerating to signal the start of a recovery.
"[It's] not something we're seeing quite yet," Kantrowitz said. "So something we'll be monitoring."
Weekly calendar
Monday
Economic data: No notable economic releases.
Earnings: Live Nation (LYV), Monday.com (MNDY)
Tuesday
Economic data: New York Fed one-year inflation expectations, October (3.0% previously)
Earnings: Cava (CAVA), Hertz (HTZ), Home Depot (HD), Instacart (CART), Novavax (NVAX), Occidental Petroleum (OXY), On Holding (ONON), Plug (PLUG), Shopify (SHOP), SoundHound (SOUN), Spotify (SPOT)
Wednesday
Economic data: MBA Mortgage Applications, week ending Nov. 8 (-10.8% previously) Consumer Price Index, month-over-month, October (+0.2% expected, +0.2% previously); Core CPI, month-over-month, October (+0.3% expected, +0.3% previously); CPI, year-over-year, October (+2.6% expected, +2.4% previously); Core CPI, year-over-year, October (+3.3% expected, +3.3% previously); Real average hourly earnings, year-over-year, October (+1.5% previously)
Earnings: Cisco (CSCO)
Thursday
Economic data: Initial jobless claims, week ending Nov. 9 (225,000 expected, 221,000 previously); Producer Price Index, month-over-month, October (+0.2% expected, 0% previously); PPI, year-over-year, October (+2.3% expected, 1.8% previously)
Import prices, month-over-month, January (-0.1% expected, +0.0% previously); Export prices, month-over-month, January (-3.2% previously); Industrial production, month-over-month, January (+0.4% expected, +0.1% previously); NAHB housing market index, February (44 prior)
Earnings: Advance Auto Parts (AAP), Applied Materials (AMAT), Disney (DIS), JD.com (JD), Oklo (OKLO)
Friday
Economic data: Retail sales, month-over-month, October (+0.3% expected, +0.4% previously); Retail sales ex-auto and gas, October (+0.3% expected, +0.7% previously); Import price index, month-over-month, October (-0.1% expected, -0.4% prior); Industrial production month-over-month, October (-0.2% expected, -0.3% prior)
Earnings: Alibaba (BABA), Spectrum Brands (SPB)
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
Read the latest financial and business news from Yahoo Finance
45.
Invesco to Pay $17.5M Penalty to Settle SEC ESG Charges
2024-11-08 22:17:12 by James Rubin from etf.com
Invesco Advisors has agreed to pay a $17.5 million civil penalty to settle Securities and Exchange Commission charges that it had misled investors about the percentage of company assets under management that included environmental, social, and governance elements in investing decisions, the regulator said in a press release Friday.
According to the SEC, from 2020 to 2022, the Atlanta-based asset management giant said that between 70% and 94% of its parent company's AUM were "ESG integrated," but that the information was deceptive because the totals encompassed passively managed ETFs such as the Invesco QQQ Trust (QQQ) and Invesco S&P 500 Equal Weight ETF (RSP), which did not consider ESG in its investing decisions. The regulator noted that Invesco did not have a written policy that detailed ESG integration.
"Invesco saw commercial value in claiming that a high percentage of company-wide assets were ESG integrated. But saying it doesn’t make it so,” said Sanjay Wadhwa, Acting Director of the SEC’s Division of Enforcement. “Companies should be straightforward with their clients and investors rather than seeking to capitalize on investing trends and buzzwords.”
SEC Increased ESG Vigilance
The SEC has grown increasingly vigilant about ESG claims in recent years as regulators try to tamp down on greenwashing and other misleading marketing meant to entice investors for whom these principles are important. Last month, the agency fined WisdomTree Asset Management $4 million for failing to follow its own investment criteria for three now defunct ETFs that were marketed under the banner of ESG.
Read More: SEC Fines WisdomTree $4M for ETF Greenwashing
In its order regarding Invesco, the SEC said that Invesco had violated the Investment Advisers Act of 1940, which regulates the activities of investment advisors. The regulator said that Invesco did not admit or deny wrongdoing and "agreed to cease and desist from violations of the charged provisions."
In an emailed statement, Invesco said it was "pleased to resolve this matter," and that it "has not issued public reports of firmwide ESG integration levels since 2022."
Invesco noted that it had "cooperated fully with the investigation."
46.
Stock market 'exuberance' looms ahead with Trump win
2024-11-07 16:21:39 by Josh Schafer from Yahoo FinanceThe stock market's feverish rally following Donald Trump's presidential election victory may have just been an early appetizer for a strong few months of gains.
"Exuberance lies ahead," Julian Emanuel, who leads the equity, derivatives, and quantitative strategy team at Evercore ISI, wrote in a note to clients Wednesday night. "President-Elect Trump will move fast on policy initiatives, and stocks will move fast in response."
Emanuel, who already had a 6,000 call on the S&P 500 for 2024, now sees the S&P 500 hitting 6,600 by the end of June 2025, about an 11% increase from its current level. A "public reengaged in speculation," as evidenced by Wednesday's market action with bitcoin (BTC-USD) hitting 76,000 for the first time and Tesla (TSLA) stock soaring 14%, could help drive the benchmark index higher, per Emanuel.
Market tops are often hallmarked by "exuberance," Emanuel wrote. But with subdued activity in the IPO market and a lack of meme-like action in stocks where equities are surging without the fundamentals to back them, the true signs of an overstretched market rally aren't flashing red.
Emanuel admits when considering the S&P 500 is selling at more than 24 times the past 12 months' earnings, stocks look expensive from a valuation perspective. But as strategists often point out, high valuations aren't typically a great market-timing tool.
"Expensive has a history of getting more expensive and lasting longer with greater gains," Emanuel wrote. "This market will be driven higher by the policy prospect of deregulation in DC driving a capital market cycle largely absent since the [October 2022] trough."
Additionally, Emanuel cites the history of a bull markets. The current bull market is 25 months old and boasts a return of 65%. This is well short of the average 50-month-long bull market that returns 152%.
The case for stocks to run higher is also supported by the Fed's cutting cycle, Emanuel argues. Since the Fed cut rates by half a percentage point on Sept. 18, the 10-year Treasury yield has soared about 80 basis points to about 4.42%.
Typically, this would be considered a headwind for stocks. Instead, the S&P 500 has risen more than 5%. Emanuel points out the only other time this happened during a Fed rate-cutting cycle was the 1995 "soft landing," where the economy remained on solid footing and "the start of a glorious stock market epoch" began, per Emanuel.
In a client note on Tuesday night, Stifel chief equity strategist Barry Bannister offered similar sentiment to Emanuel, writing that the" S&P 500 has entered a mania." Bannister, who's been bearish on stocks amid the rally, admits the index could keep pushing higher to the low 6,000s in the coming months. This would come as the S&P 500 reaches an 80-year-high valuation, Bannister wrote. But he also still sees a downside scenario where the index falls from those levels to 5,250 a year later.
The key risk is a resurgence in inflation that prompts the Fed to keep interest rates higher for longer than markets are currently expecting.
"If inflation proves resurgent ... we suspect Chairman Powell’s last 12 months in office (May 2025 to May 2026) are a significant investor risk," Bannister wrote.
Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance
47.
Trump Win Fuels Market Rally
2024-11-06 21:03:03 by Jeff Benjamin from etf.com
The financial markets exhaled on Wednesday morning in the form of strong rallies across most risk assets.
With Donald Trump declared the winner of the presidential election in a surprisingly lopsided victory over Kamala Harris, the SPDR Dow Jones Industrial Average ETF (DIA) and the SPDR S&P 500 ETF (SPY) opened with gains of more than 3% and more than 2%, respectively.
The tech-heavy Invesco QQQ Trust (QQQ) wasn’t far behind with an opening gain of 1.9%.
For financial advisors and market-watchers, the stock market rally boiled down to the kind of certainty Wall Street is known to appreciate.
Strong Market Rally Occurs Across Risk Assets
“I wonder if some of the pop has to do with the decisiveness of the win, because so many Americans, and I think the stock market, were worried about a contested election,” said Tim Holland, chief investment officer at Orion.
In terms of any kind of “Trump trade,” Holland said, “it seems to be reflationary in nature.”
“This is good for the U.S. dollar and U.S. small cap stocks, and not so good for traditional fixed income and emerging markets,” he noted.
Paul Schatz, president of Heritage Capital, attributed the market’s reactionary rally to the prospects of a Republican sweep of the White House and both houses of Congress, which has not yet been determined.
“For short-term money, this is a good selling opportunity,” he said. “Stocks may rally for a day or three, but let’s not forget the Fed meets today and tomorrow.”
Tom Graff, chief investment officer at Facet, put the post-election rally in a longer-term context by considering such factors as the future of the tax cuts that Trump passed in 2017 and are scheduled to expire next year.
“A big part of why stocks are jumping is Wall Street hoping that those tax cuts remain in place or even taxes get cut further,” he said.
In regards to a Trump trade, Graff said, “the markets believe that Trump’s tariff plans will cause more inflation.”
“The TIPS market is pricing in about 0.15% higher inflation over the next couple of years based strictly on today’s move,” he added. “Rates are also moving because markets believe Trump will run a larger deficit, which means the government will have to sell more Treasury bonds and that pushes interest rates higher.”
48.
The one word that's popping up everywhere this earnings season: Morning Brief
2024-11-06 11:00:48 by Jared Blikre from Yahoo FinanceThis is The Takeaway from today's Morning Brief, which you can sign up to receive in your inbox every morning along with:
The chart of the day
What we're watching
What we're reading
Economic data releases and earnings
Around 80% of S&P 500 (^GSPC) constituents have reported quarterly results so far, and a better picture of the economy has emerged.
As well as a whole lot of one word: "bottom."
The US economy has evolved along two distinct tracks over the last two years, with the services sector — just over 70% of the economy — booming. It registered a multiyear high Tuesday, according to the Institute for Supply Management.
On the other hand, the manufacturing sector has been languishing in contraction territory for two years. In fact, the last time the gap between these two parts of the economy was greater was the beginning of this century, in December 2000.
The bifurcation of the economy has been part of the reason this bull market feels "weird."
In a note this week, Bank of America's US Equity and Quant team wrote that some of this dour outlook got worse — but more optimistic.
So far, the continued problems that have plagued cyclical sectors for almost two years have ticked up this earnings season: weak demand, flat sales growth, and high inventories. It's still very hard to be in the goods and manufacturing business.
"Mentions of weak demand jumped," the analysts wrote, "[and are] now tracking the highest level since COVID's 2Q20 slump."
But the team, led by Savita Subramanian, also tracks mentions of the word "bottom" in earnings calls, and they noted that mentions have surged 42% over last year.
"This jump in 'bottom' mentions has usually marked an inflection in [earnings per share]," noted BofA. It says that companies have largely finished reducing their inventory levels and may soon start to rebuild their stock of goods. "Our data suggests that the worst in de-stocking is behind us."
A key factor, of course, is the election, and Subramanian and co. noted that much of the poor corporate sentiment is "malaise ... typical of pre-election uncertainty." But the flip side is that with the election out of the way — regardless of who wins — corporates will have the cloud of uncertainty lifted.
"History suggests that investment activity typically accelerates post-election," the analysts wrote. "We believe the election could be a clearing event for companies to unleash capex."
Throw in a new cyclical recovery backed by a friendly Federal Reserve delivering a long-awaited easing cycle, and even small-cap investors can get excited about the potential for a broad-based rally in stocks.
On Yahoo Finance's podcast Stocks in Translation, Yahoo Finance editor Jared Blikre cuts through the market mayhem, noisy numbers, and hyperbole to bring you essential conversations and insights from across the investing landscape, providing you with the critical context needed to make the right decisions for your portfolio. Find more episodes on our video hub or watch on your preferred streaming service.
Click here for the latest stock market news and in-depth analysis, including events that move stocks
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49.
The Best Technology ETF to Invest $1,000 in Right Now
2024-11-04 13:30:00 by Neil Patel, The Motley Fool from Motley Fool
The S&P 500 has generated a total return of 253% in the past decade. That's a fantastic gain for a passive investment vehicle that provides access to a large group of companies in different industries.
But some investors might want exposure to specific areas of the economy, such as technology-related businesses. If this sounds like you, then you should consider buying $1,000 worth of Invesco QQQ Trust (NASDAQ: QQQ). Here's why.
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Owning dominant tech companies
The Invesco QQQ Trust is an exchange-traded fund (ETF) that tracks the performance of the 100 largest non-financial stocks on the Nasdaq exchange. This is much different than the S&P 500 which follows the movements of the 500 biggest U.S.-based companies.
Investors need to understand the composition of the Invesco QQQ Trust. It has high exposure to the information technology sector, constituting 51% of assets. And the so-called "Magnificent Seven" combined makes up 43% of the ETF.
Historically, this has worked out well. These businesses have generally registered strong growth. That's because they benefit from numerous tailwinds, like artificial intelligence, digital payments, digital advertising, electric vehicles, e-commerce, and cloud computing. Today, these seven companies are some of the most valuable in the world.
Stellar performance
The S&P 500 has put up impressive returns in recent years, but the Invesco QQQ Trust has done a lot better. In the past decade, it has generated a total return of 443%, translating to a yearly gain of 18.4%. A $1,000 investment in October 2014 would be worth more than $5,400 today.
It has helped that the economy was mostly in a low-interest-rate environment during much of this time. This favorable backdrop fueled the rise of the top stocks in the QQQ.
Investors might think that owning this ETF is expensive. However, that couldn't be further from the truth. The Invesco QQQ Trust's expense ratio of 0.2% means that for every $1,000 invested, only $2 goes toward the fee per year. Investors get to keep more of their money over time.
In the past few years, the Ark Innovation ETF, the flagship fund of Cathie Wood's Ark Invest, has gotten a lot of attention. Like the QQQ, it also focuses on companies that are innovative and disruptive, but its performance has been abysmal. In the past five years, the Ark Innovation ETF has generated a total return of 12.8%, much lower than the Invesco QQQ Trust's 164%. And the Ark Innovation ETF carries an expense ratio of 0.75%, almost four-times the QQQ.
Keep this in mind
The Invesco QQQ Trust has had a wonderful year thus far, rising 21.5% (as of Oct. 30). Because it trades near its all-time high, some hesitant investors might be contemplating if now is still a good time to put money to work. After all, isn't it a better idea to simply wait for a sizable pullback before investing?
In theory, trying to time the market sounds like the right move, buying at the lows and selling at the highs, repeating this process over and over again. But this is a losing proposition, as no one can do it accurately consistently. In fact, you'll cause more harm to your portfolio by doing this.
The best course of action, then, is to perhaps consider investing that $1,000 right now into the Invesco QQQ Trust and adopting a long-term mindset. If you want to spread that investment out, then utilize a dollar-cost averaging strategy, investing a small sum of capital on a monthly or quarterly basis. This lets you take advantage of multiple price points, without having to correctly time the market.
Should you invest $1,000 in Invesco QQQ Trust right now?
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The Best Technology ETF to Invest $1,000 in Right Now was originally published by The Motley Fool
50.
Dividend Investor Earning $9,495 Per Month Regrets Not Focusing on Dividends Sooner, Shares His 10 Stock, ETF Picks
2024-11-03 16:00:13 by Deidre Woollard from BenzingaBenzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below.
Major technology stocks like Meta Platforms and Microsoft fell after their latest earnings as Wall Street was spooked by their mounting expenses and AI spending. With election-related uncertainties and the need for portfolio diversification, dividend stocks remain in focus. Data shows dividend growth stocks have outpaced inflation over the past 23 years. However, choosing the right dividend stocks and ETFs in today's market remains a key question for beginner investors.
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About a year ago, a dividend investor shared his detailed income report and story on r/Dividends – a discussion board for income investors with over 600,000 members. The investor said his investing account was started with $60,000, which he saved in his 403(b) retirement plan while working at his first job for eight years. He then rolled over this money into an IRA.
The investor said this $60,000 rose to $1.2 million in 27 years from 1996 "without putting any new money."
"During that time, I have experienced tremendous market ups/downs like the internet (tech) bubble/burst, housing bubble/burst, Great Recession and recent Covid-19 crash and recovery. During all these times, my focus was the growth of company stocks, mutual funds and ETFs. My core holdings were always SPY and QQQ about 50-70% and occasionally some speculative stocks about 20-30%," the investor said.
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He highlighted that he stayed invested in the market during all these ups and downs. The investor said he is now retired and switched his focus to dividend investing in 2022.
"My only regret is that I should have switched to dividend focus a little sooner when I had $1.5m, but I guess it's life. Its projected dividend yield is ~9%, but I will be content with ~8% dividend yield."
The investor clarified that most of his portfolio gains came from when he focused on growth.
"The only dividend I have received during my accumulation phase was from SPY & QQQ. I heavily focused on growth," he said.
The investor’s portfolio screenshots showed his monthly dividend income of about $9,495 or $113,949 per year. Most of his holdings were dividend ETFs. Let's take a look at the portfolio.
JPMorgan Equity Premium Income ETF
JPMorgan Equity Premium Income ETF (NYSE:JEPI) was the biggest position in the portfolio of the investor earning $9,495 per month in dividend income. The portfolio screenshots showed he owned 5,323 shares of JEPI, worth about $288,187 at the time. The investor raked in about $32,933 in annual dividend income from the ETF.
JPMorgan Nasdaq Equity Premium Income ETF
JPMorgan Nasdaq Equity Premium Income ETF (NASDAQ:JEPQ) was the second-biggest position of the Redditor, earning $9,495 per month in dividends, as his position in the covered call ETF was valued at about $268,275. JEPQ distributes monthly dividends, invests in Nasdaq companies and generates extra income by selling call options. The ETF yields about 9.2%.
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The Invesco QQQ Trust Series 1
The Invesco QQQ Trust, Series 1 (NASDAQ:QQQ) is one of the best ways to enjoy dividend income and capital gains through stock price appreciation as the ETF exposes some of the top tech stocks in the NASDAQ-100 index. The fund pays quarterly dividends and yields about 0.6%. The investor owned 544 shares of the fund, according to the screenshots he publicly shared on Reddit.
During the discussion on his post, the investor commented about his conviction in the QQQ:
"Since I am much younger than Buffett, I also have faith in QQQ. I have faith in American entrepreneurship and technological creativity. So, my core holdings are always SPY and QQQ."
The SPDR S&P 500 ETF Trust
One of the key perks of investing in The SPDR S&P 500 ETF Trust (NYSE:SPY) is that it allows you to see your capital grow and get quarterly dividend payments. The fund has a dividend yield of about 1.2%. The Redditor earning $9,495 per month in dividends had 433 SPY shares in his portfolio, valued at about $181,868. The investment brought in $2,792 in annual dividend income for the investor.
Ares Capital
Ares Capital Corporation (NASDAQ:ARCC) is a business development company with a dividend yield of about 9%. The investor had 5,820 shares of Ares Capital in his portfolio, worth about $109,532 at the time. The investment earned about $11,174 in income.
Global X Russell 2000 Covered Call ETF
The investor earning $9,495 monthly dividends had an $82,000 position in Global X Russell 2000 Covered Call ETF (NYSE:RYLD). The fund generates income by selling call options on the small-cap-heavy Russell 2000 Index. The ETF yields about 12%. Being a covered call ETF, RYLD can incur losses during down markets.
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iShares iBoxx $ High Yield Corporate Bond ETF
The iShares iBoxx $ High Yield Corporate Bond ETF (NYSE:HYG) provides investors with exposure to U.S. dollar-denominated high-yield corporate bonds. It tracks the Markit iBoxx USD Liquid High Yield Index, which comprises a broad range of below-investment-grade bonds. The fund has a dividend yield of about 6%.
YieldMax TSLA Option Income Strategy ETF
YieldMax TSLA Option Income Strategy ETF (NYSE:TSLY) is a popular YieldMax dividend ETF for high-yield seekers. With a distribution rate of over 60%, TSLY generates income by selling call options on Tesla shares. Over the past year, TSLY has been down about 42%, while Tesla is up 28%.
Guggenheim Strategic Opportunities Fund
Guggenheim Strategic Opportunities Fund (NYSE:GOF) exposes investors to fixed-income and other debt securities. It invests in various credit instruments, including corporate bonds, asset-backed securities, mortgage-backed securities and other high-yield debt. However, it's a risky investment because it invests in ungraded bonds, also known as junk bonds.
The investor, who earned $9,495 per month, had 776 shares of GOF in his portfolio. This investment generated $1,695 in annual income.
iShares 20+ Year Treasury Bond BuyWrite Strat ETF
iShares 20+ Year Treasury Bond BuyWrite Strat ETF (BATS:TLTW) invests in U.S. Treasury bonds with 20 years or more maturities. It also generates income by selling call options on the U.S. Immigration and Customs Enforcement 20+ Year U.S. Treasury Index.
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This article Dividend Investor Earning $9,495 Per Month Regrets Not Focusing on Dividends Sooner, Shares His 10 Stock, ETF Picks originally appeared on Benzinga.com