1.

Two key inflation prints await investors as rate fears rattle markets: What to know this week

2025-01-12 12:51:12 by Josh Schafer from Yahoo Finance

A hot December jobs report capped off a week in which investor concerns over "higher for longer" interest rates dragged down stocks.

The S&P 500 (^GSPC), the Nasdaq Composite (^IXIC), and the Dow Jones Industrial Average (^DJI) all ended the week down around 1%.

The biggest concern driving markets is that inflation doesn't continue its downward trend toward the Federal Reserve's 2% target. Two key readings will greet investors in the week ahead on that front. Tuesday will bring a reading on wholesale inflation before the more widely followed Consumer Price Index (CPI) is set for release on Wednesday morning.

Updates on retail sales, inflation expectations, and housing activity are also on the schedule.

In corporate news, quarterly results from JPMorgan (JPM), Citi (C), Wells Fargo (WFC), Bank of America (BAC), BlackRock (BLK), Goldman Sachs (GS), Morgan Stanley (MS), and Taiwan Semiconductor (TSM) will highlight the week.

A 'pivot' to inflation data

The December jobs report showed the US labor market remains on more solid ground than initially thought. Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November.

Meanwhile, the unemployment rate fell from to 4.1% from 4.2% the month prior. Revisions added to the narrative too. The cycle high for the unemployment rate initially was 4.3% in July, but that figure was revised down to 4.2% in Friday's release.

Overall, the report has many strategists confident the Federal Reserve will hold off on further interest rate cuts for now. Some on Wall Street think it may have even cracked the door open for the Fed to consider rate hikes in 2025.

"Our base case has the Fed on an extended hold," Bank of America Securities US economist Aditya Bhave wrote in a note to clients on Friday. "But we think the risks for the next move are skewed toward a hike."

Bhave noted that the bar for the Fed to hike is high since the central bank has noted that interest rates remain restrictive. But should the Fed's preferred inflation gauge — the Personal Consumption Expenditures metric, excluding volatile categories like food and energy — reaccelerate or inflation expectations move higher, a hike could be on the table.

Morgan Stanley chief US economist Michael Gapen said the report showed "Fed cuts are about inflation now."

As of Friday afternoon, markets were pricing in just one interest rate cut for 2025. Markets don't see a more than 50% chance the Federal Reserve cuts interest rates until at least the end of its June meeting, per the CME FedWatch tool.

Price check

A fresh update on inflation will come next week with the release of the Consumer Price Index (CPI) for December. Wall Street economists expect headline inflation was at 2.9% annually in December, an increase from the 2.7% in November. Prices are set to rise 0.3% on a month-over-month basis, per economist projections, in line with the month prior.

On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in December. This would mark the fifth straight month of a 3.3% reading of core CPI.

"We are approaching another speed bump on the road to 2% inflation," the Wells Fargo economics team wrote in a weekly note to clients. "Solid increases in energy and food prices at the end of 2024 underpin our forecast of a 0.4% monthly gain in the Consumer Price Index in December. If realized, the annual rate of inflation will tick up to a five-month high of 2.9%."

Retail sales

Thursday will give markets an indication of consumer spending levels at the end of 2024. Economists estimate retail sales increased 0.5% over the prior month during December. 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 0.3%.

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 2.7%.

Back to fundamentals

The stock market has stumbled in recent weeks as rates have soared. This action played out on Friday as the 10-year Treasury yield (^TNX) added about five basis points to creep near 4.8%, its highest level since November 2023.

Bonds and stocks have been negatively correlated as of late, meaning that as yields have risen, stocks have fallen. Therefore, any good economic news that pushes yields higher has been bad for stocks.

Citi US equity strategist Scott Chronert wrote in a note to clients that the backdrop of "good economic news is bad market news" tends to last for an extended period of time.

Still, the question remains: what can shake the market out of this environment? Nationwide chief market strategist Mark Hackett wrote in a note to clients that the upcoming earnings season could be "the best opportunity" to change the sour mood for stocks.

Broadly, Wall Street is expecting another strong quarter of earnings reports. Consensus estimates project earnings to grow 11.7% year over year, which would mark the highest earnings growth in three years.

“From my perspective, I think investors are wrongly obsessed with how many Fed rate cuts we're going to get this year,” State Street Global Advisors chief investment strategist Michael Arone told Yahoo Finance. “Earnings are growing, and I think that's where the focus should be.”

Weekly calendar

Monday

Economic data: New York Fed one-year inflation expectations, December (2.97% previously)

Earnings: KB Home (KBH)

Tuesday

Economic data: NFIB small business optimism, December (100.5 expected), Producer Price Index, month over month, December (+0.3% expected, +0.4% previously); PPI, year over year, December (+3% previously)

Earnings: No notable earnings.

Wednesday

Economic data: MBA Mortgage Applications, week ending Jan. 10 (-3.7% previously) Consumer Price Index, month over month, (+0.3% expected, +0.3% previously); Core CPI, month over month, December (+0.2% expected, +0.3% previously); CPI, year over year, December (+2.9% expected, +2.7% previously); Core CPI, year over year, December (+3.3% expected, +3.3% previously); Real average hourly earnings, year over year, December (+1.3% previously)

Earnings: BlackRock (BLK), BNY (BK), Citi (C), JPMorgan Chase (JPM), Synovus (SNV), Wells Fargo (WFC)

Thursday

Economic data: Retail sales, month over month, December (+0.5% expected, +0.7% previously); Retail sales ex-auto and gas, December (+0.4% expected, +0.2% previously); Import price index, month over month, October (-0.1% expected, -0.4% prior); Initial jobless claims, week ending Jan. 11 (201,000 previously); Import prices, month over month, December (+0.1% previously); Export prices, month over month, December (-0% previously); NAHB housing market index, January (46 prior)

Earnings: Bank of America (BAC), J.B. Hunt (JBHT), Morgan Stanley (MS), PNC (PNC), Taiwan Semiconductor (TSM), UnitedHealth Group (UNH), U.S. Bancorp USB (USB)

Friday

Economic data: Industrial production, month over month, December (+0.3% expected, -0.1% previously); Housing starts month over month, December (+2% expected, -1.8% prior); Building permits month over month, December preliminary (-2.4% expected, +5.2% prior)

Earnings: Citizens Financial Group (CFG), State Street (STT), Truist (TFC), Webster Bank (WBS)

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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2.

This Top ETF Has Generated 1,400% Returns in 20 Years. Here's Why It Can Still Soar Even Higher.

2025-01-12 09:50:00 by David Jagielski, The Motley Fool from Motley Fool

Earning a great return in the stock market doesn't necessarily mean you have to be great at picking individual stocks. Exchange-traded funds (ETFs) can give you a simpler way of investing, and the good news is you can still earn a fantastic return by doing so.

Some ETFs target top growth stocks and can provide you with exposure to many great businesses. And they do regular rebalancing and reconstruction, so you don't have to worry about having to closely monitor which stocks are still good buys and which ones may have become too risky.

A top-performing fund that is popular with investors is the Invesco QQQ Trust (NASDAQ: QQQ). It tracks the Nasdaq 100 index, with exposure to the top 100 nonfinancial stocks on the exchange.

These will include popular tech stocks as well as top-performing stocks in other industries. Although it has performed exceptionally well over the years, the fund can still be a great place to invest for the long haul.

The Invesco fund has significantly outperformed the market over the years

To say that the Invesco fund has been a market-beating investment for decades would be a massive understatement. Since 2005, its total returns (which include dividends) have come in at more than 1,400% -- far higher than the S&P 500 over that stretch.

To put that into perspective, a $25,000 investment in the fund 20 years ago would be worth around $380,000 today. Meanwhile, a similar investment in a fund that mirrors the S&P 500 might only be worth $180,000.

While investing in the S&P 500 can be a good way to hold a broad mix of stocks, the benefit of the Invesco fund is that with a more concentrated portfolio of top growth stocks, it can generate superior returns. There may be volatility from one year to the next, but over the long haul, growth stocks generally outperform other types of investments.

Why the Invesco fund isn't in danger of running out of upside anytime soon

Although the Invesco fund has produced incredible returns, and you might be worried about the valuations of high-performing growth stocks, it's still possible for this ETF to continue outperforming the market.

The simple reason comes back to it tracking the Nasdaq 100, which undergoes regular reconstruction and rebalancing. Unlike a hot growth stock that may run out of steam, the Nasdaq 100's composition will change over time, giving it more room to rise.

Last month, for example, it completed its annual reconstruction and upon doing so, removed multiple stocks: Illumina, Super Micro Computer, and Moderna. They were replaced in the index with Palantir Technologies, MicroStrategy, and Axon Enterprise.

The index may be susceptible to high valuations, but by focusing on just the best of the best, it means funds that track the Nasdaq 100 can be in excellent positions to outperform the market in the long run.

Investing in the fund regularly can be a solid long-term strategy

Even if you're worried that valuations might be high on the Nasdaq today, investing regularly in the Invesco fund can be a good way to balance out your risk. Investing a regular monthly amount in the fund can build up your position over time, ensuring that you aren't too worried about trying to time the market and waiting for an ideal buying opportunity, which may never come along.

By continuously investing, if the ETF drops in value, you are averaging down your position. And if it rises, you're benefiting from strong market conditions and buying into the rally along the way. Either way, investing in the fund on an ongoing basis can make for a great long-term strategy and be an effective way to grow your portfolio at a potentially higher rate than just trying to track the S&P 500.

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This Top ETF Has Generated 1,400% Returns in 20 Years. Here's Why It Can Still Soar Even Higher. was originally published by The Motley Fool

3.

QQQ, SCHG, SCHD: 3 Great ETFs to Start Investing in 2025

2025-01-11 14:19:37 by TipRanks from TipRanks

Looking to get started on your investing journey in 2025? Exchange-traded funds (ETFs) are a great place to start, as they offer diversified exposure to a wide group of the market’s best stocks in one simple, convenient instrument.

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Here are three of the best ETFs to consider as you set out on your path as an investor – the Schwab U.S. Large-Cap Growth ETF (SCHG), the Schwab U.S. Dividend Equity ETF (SCHD), and the Invesco QQQ Trust (QQQ). All three offer diversified exposure to great stocks, varying levels of strong returns over the years, and, importantly, low fees.

Schwab U.S. Large-Cap Growth ETF (SCHG)

If you’re looking for an ETF to start out with, the Schwab U.S. Large-Cap Growth ETF is a good place to begin. This growth-oriented ETF from Charles Schwab was launched in 2009 and now has $37.7 billion in assets under management (AUM).

It offers investors exposure to a basket of 227 companies that make up the Dow Jones U.S. Large-Cap Growth Total Stock Market Index.

You’ll find an overview of SCHG’s top 10 holdings from TipRanks’ holdings tool below.

As you can see, SCHG has positions in many of the market’s most dominant stocks, including the magnificent seven plus other powerhouses like Broadcom (AVGO) and Eli Lilly (LLY). These are many of the most dynamic and innovative companies in the U.S., not to mention the world, with exposure to compelling long-term themes like artificial intelligence, quantum computing, autonomous vehicles, and more, making them good propositions for long-term investors.

SCHG’s top holdings are also rated highly by TipRanks’ Smart Score system. The Smart Score is a quantitative stock scoring system created by TipRanks. It gives stocks a score from one to 10, based on eight key market factors. The score is data-driven and does not involve any human intervention. Seven of SCHG’s top 10 holdings have Outperform-equivalent Smart Scores of 8 or above.

SCHG itself features an Outperform-equivalent ETF Smart Score of 8 out of 10.

Another reason SCHG is a top choice for new investors is that it has generated strong returns over a long period of time.

As of the end of 2024, SCHG has delivered an annualized three-year return of 11.4%, an annualized five-year return of 19.8%, and an annualized 10-year return of 16.7%. These returns beat those of the broader market over each time frame as the Vanguard S&P 500 ETF (VOO), a good stand-in for the broader market and an ETF that has produced strong returns itself, delivered an annualized three-year return of 8.9%, an annualized five-year return of 14.5%, and an annualized 10-year return of 13.1% as of the same date.

Additionally, SCHG is delivering this market-beating performance for a very low price. Its expense ratio of 0.06%, means that an investor in the fund will pay just $6 in fees on a $10,000 investment annually.

Is SCHG Stock a Buy, According to Analysts?

Turning to Wall Street, SCHG earns a Strong Buy consensus rating based on 195 Buys, 31 Holds, and one Sell rating assigned in the past three months. The average SCHG stock price target of $31.92 implies 13.4% upside potential from current levels.

Overall, I’m bullish on SCHG and consider it a great building block for new investors (and all investors for that matter) based on its strong portfolio of highly-rated stocks, its history of outperforming the market to generate compelling returns, and its ultra-low expense ratio.

Schwab U.S. Dividend Equity ETF (SCHD)

Like SCHG, the Schwab U.S. Dividend Equity ETF is another offering from blue-chip asset manager Charles Schwab (SCHW). SCHD debuted in 2011 and has grown to $65.8 billion in AUM.

While SCHG focuses on growth stocks, SCHD is instead focused on dividend stocks.

The fund owns a portfolio of 101 dividend stocks, and its top 10 holdings make up a reasonable 41.1% of assets. You can check out an overview of SCHD’s top 10 holdings below.

While SCHG caters towards the more growth-oriented part of the market, SCHD hones in on tried-and-true dividend stocks like healthcare giants Pfizer (PFE) and AbbVie (ABBV), soft drink giants Coca-Cola (KO) and Pepsi (PEP) and even BlackRock (BLK), the world’s largest asset manager.

These companies have been paying and, in many cases, growing their dividends for many years. Because they hail from more defensive parts of the market like healthcare, consumer staples, and financials, these holdings, and by extension SCHD itself, should hold up better than the market as a whole during a market pullback as these sectors typically feature lower valuations and more defensive business models.

SHCD features an attractive dividend yield of 3.6%, which is nearly triple the S&P 500’s (SPX) yield of 1.3%. Newer investors can reinvest these above-average dividends to create a snowball effect and slowly but surely build up their positions in SCHD over time.

It’s worth noting that SCHD has slightly underperformed the market over time, but its results have still been quite positive, and it may outperform the broader market if there is a rotation from growth stocks to more defensive names like those that SCHD specializes in. As of December 31, SCHD has posted an annualized three-year return of 4.2%, an annualized five-year return of 11.1%, and an annualized 10-year return of 11.0%. For comparison, the aforementioned VOO has generated better returns over the comparable periods.

Like SCHG, SCHD sports a favorable expense ratio of just 0.06%, meaning an investor will pay just $6 in fees annually on a $10,000 investment in the fund.

Is SCHD Stock a Buy, According to Analysts?

Turning to Wall Street, SCHG earns a Moderate Buy consensus rating based on 55 Buys, 41 Holds, and five Sell ratings assigned in the past three months. The average SCHD stock price target of $31.31 implies 14.6% upside potential from current levels.

I’m bullish on SCHD as another great choice for new investors based on its diversified portfolio of blue-chip dividend stocks, its attractive above-average dividend yield, and its favorable expense ratio.

Invesco QQQ Trust (QQQ)

Last but not least, the Invesco QQQ Trust (QQQ) is another powerhouse ETF for beginners to consider.

With $321 billion in AUM, QQQ is one of the largest and most popular ETFs in the world, and with good reason. It invests in the Nasdaq 100 (NDX), an index of the 100 largest non-financial stocks listed on the Nasdaq exchange.

The Nasdaq has long been associated with top tech and growth stocks, so the ETF and its holdings skew heavily in this direction. QQQ owns 102 stocks, and its top 10 holdings account for 52.2% of assets. You’ll find an overview of QQQ’s top 10 holdings below.

As you can see, QQQ’s top holdings look fairly similar to the growth-oriented SCHG’s, with Costco (COST) replacing Eli Lilly (LLY). These holdings give investors significant exposure to secular trends like artificial intelligence, quantum computing, robotics, autonomous driving, and more. Seven of these top 10 holdings feature Outperform-equivalent Smart Scores, with QQQ itself earning an Outperform-equivalent ETF Smart Score of 8 out of 10.

QQQ’s long-term track record of outperforming the market is what truly sets it apart as a can’t-miss investment opportunity. The powerhouse ETF has outperformed the market over each of the past three-, five- and 10-year time frames, racking up the best returns in this group of three strong ETFs in the process.

As of the end of 2024, QQQ had generated an annualized three-year return of 9.5%, an excellent annualized five-year return of 20.0%, and an impressive annualized 10-year return of 18.3%. For comparison, QQQ has outperformed VOO over these three periods.

With an expense ratio of 0.20%, QQQ is the most expensive of the ETFs in this group but still reasonably priced and well below the average expense ratio for all ETFs. An investor in the fund will pay just $20 in fees on a $10,000 investment annually.

Is QQQ Stock a Buy, According to Analysts?

Turning to Wall Street, QQQ earns a Moderate Buy consensus rating based on 91 Buys, 11 Holds, and zero Sell ratings assigned in the past three months. The average QQQ stock price target of $584.51 implies 13.4% upside potential from current levels.

I’m bullish on QQQ based on its stellar long-term performance, its portfolio of top tech and growth stocks, and its reasonable expense ratio.

Three Great Building Blocks for Investors

If you’re looking to get started investing in 2025, ETFs are a great way to get the ball rolling, as they give you instant exposure to a wide array of the market’s top stocks. I’m bullish on all three of these ETFs as excellent building blocks for investors to use and start building their portfolios around.

All three feature diversified portfolios of blue-chip stocks and reasonable expense ratios. I’m bullish on SCHG and QQQ based on their portfolios of top tech and growth stocks, exposure to exciting long-term themes, and their long histories of outperforming the broader market. Meanwhile, I’m bullish on SCHD as a strong complement to these names based on its more defensive portfolio and attractive dividend yield.

Disclosure

4.

December jobs report has Wall Street starting to talk about rate hikes in 2025

2025-01-10 18:55:30 by Josh Schafer from Yahoo Finance

A hot December jobs report has many strategists confident that the Federal Reserve will hold off on further interest rate cuts for now.

And some on Wall Street think this report may have even cracked the door open for the Fed to consider rate hikes in 2025.

Bhave cautioned that the bar for the Fed to hike is high, with Fed officials still describing the current level of rates as restrictive. But should the Fed's preferred inflation gauge — the Personal Consumption Expenditures metric, excluding volatile categories like food and energy — reaccelerate or inflation expectations move higher, a hike could be on the table.

The latest reading of "core" PCE showed prices increased 2.8% in November, higher than the 2.7% seen in October. There is also concern among economists that incoming President Donald Trump's policies could push inflation higher or, at minimum, hold back inflation's progress in slowing to the Fed's 2% goal.

A fresh reading from the University of Michigan showed consumers' year-ahead inflation expectations jumped to 3.3% in January from 2.8% the month prior. Meanwhile, long-run inflation expectations also hit 3.3% in January, the highest level for the metric since 2008.

"After a very strong Dec jobs report, we think the cutting cycle is over," Bhave wrote. "Inflation is stuck above target, with upside risks."

Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November. Meanwhile, the unemployment rate fell from to 4.1% from 4.2% the month prior.

The cycle high for the unemployment rate had initially been 4.3% in July, a number that sparked investor concerns and contributed to a stock market sell-off in August. But that number was revised down 4.2% in Friday's release, showing that while the labor market cooled throughout 2024, it isn't deteriorating at a concerning pace.

"From the Fed's perspective, the unemployment rate started the year in 'too hot' territory at 3.7%, but it has cooled to 'just right' at 4.1% in December," Wells Fargo senior economist Sarah House wrote in a note to clients on Friday.

With the labor market in solid shape, House believes the Fed not cutting interest rates when it announces its next decision on Jan. 30 is "all but assured." And a March cut looks increasingly unlikely as well.

"It will take a further slowdown in inflation or much weaker labor market data for the FOMC to resume cutting rates over its next few meetings," House wrote.

EY chief economist Gregory Daco agreed.

"I think the attention will actually pivot back towards inflation developments over the course of the next three months," Daco told Yahoo Finance.

Daco is more sanguine on what those inflation prints could bring. He sees several low inflation readings leading to an interest cut in March before the Fed pauses to decipher how changes to fiscal policy could impact the inflation story. Markets are pricing in just one interest rate cut for 2025, per Bloomberg data.

Still, one thing is clear after Friday's jobs report: The market is expected to be more focused on the incoming inflation data rather than labor market developments when deciphering whether or not the Fed will cut interest rates in 2025.

"Fed cuts are about inflation now," Morgan Stanley chief US economist Michael Gapen wrote in a note to clients on Friday.

A fresh update will come next week with the release of the Consumer Price Index (CPI) for December. Wall Street economists expect headline inflation rose 2.9% annually in December, an increase from the 2.7% seen in November. Prices are set to rise 0.3% on a month-over-month basis, in line with the month prior.

On a "core" basis, which strips out food and energy prices, CPI is expected to have risen 3.3% over last year in December. This would mark the fifth straight month of a 3.3% annual reading for core inflation.

US Federal Reserve Chairman Jerome Powell gestures as he speaks at a press conference after the Monetary Policy Committee meeting in Washington, DC, on December 18, 2024. The US Federal Reserve cut interest rates by a quarter point December 18 and signaled a slower pace of cuts ahead, amid uncertainty about inflation and US President-elect Donald Trump's economic plans. Policymakers voted 11-to-1 to lower the central bank's key lending rate to between 4.25 percent and 4.50 percent, the Fed announced in a statement. They also penciled in just two quarter-point rate cuts for next year, and sharply hiked their inflation outlook for 2025. (Photo by ANDREW CABALLERO-REYNOLDS / AFP) (Photo by ANDREW CABALLERO-REYNOLDS/AFP via Getty Images) — US Federal Reserve Chairman Jerome Powell gestures as he speaks at a press conference after the Monetary Policy Committee meeting in Washington, D.C., on Dec. 18, 2024. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images)

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

5.

December jobs report shows unemployment fell to 4.1%, 256,000 jobs added to finish 2024 on high note

2025-01-10 14:08:52 by Josh Schafer from Yahoo Finance

The US economy added more jobs than forecast in December while the unemployment rate unexpectedly fell.

Data from the Bureau of Labor Statistics released Friday showed 256,000 new jobs were created in December, far more than the 165,000 expected by economists and higher than the 212,000 seen in November. The unemployment rate fell to 4.1% from 4.2% in November. December marked the most monthly job gains seen since March 2023.

Revisions to the unemployment rate in 2024 also showed the labor market was stronger than initially thought. The cycle high for the unemployment rate had initially been 4.3% in July but that figure was revised down to 4.2% in Friday's release.

"There is no denying that this is a strong report," Jefferies US economist Thomas Simons wrote in a note to clients on Friday.

Wage growth, an important measure for gauging inflation pressures, rose 0.3% in December, in line with economists' expectations and below the 0.4% seen in November.

Compared to the prior year, wages rose 3.9% in December, below 4% in November. Meanwhile, the labor force participation rate remained flat at 62.5%.

The strong picture of the US labor market presented in Friday's report pushed out investor bets on when the Federal Reserve will cut interest rates next. Traders now see a less than 50% chance of the Fed cutting interest rates until June, per the CME Fed Watch Tool. A day prior, investors had favored a cut in May.

"You're seeing this steady but slightly cooling labor market trend, which is very encouraging from a Fed perspective," EY chief economist Gregory Daco told Yahoo Finance. "I think the attention will actually pivot back towards inflation developments over the course of the next three months."

Stocks sank following the report, with futures tied to all three major averages down nearly 1%. Meanwhile, the 10-year Treasury yield (^TNX), a recent headwind for stocks, added about 8 basis points to reach 4.78%, its highest level since November 2023.

"The problem here now is if you're looking for rate cuts based on a weakening labor market ... stop looking for those," Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance. "It's not going to happen in the immediate term."

NANTERRE, FRANCE - AUGUST 03: A general view as fans hold up national flags in support of Team United States during the evening Swimming session on day eight of the Olympic Games Paris 2024 at Paris La Defense Arena on August 03, 2024 in Nanterre, France. (Photo by Quinn Rooney/Getty Images) — A general view as fans hold up national flags in support of Team United States during the evening Swimming session on day eight of the Olympic Games Paris 2024 at Paris La Defense Arena on Aug. 3, 2024, in Nanterre, France. (Quinn Rooney/Getty Images)

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

6.

Carter Funeral Suspends Stock Market; What to Expect Friday

2025-01-09 14:54:00 by Mark Vickery from Zacks

Thursday, January 9, 2025

Stock markets will suspend trading this Thursday, taking a traditional pause for the funeral of a former head of state. James Earl Carter, Jr., known as Jimmy even during his years in the White House (1977-80), was the 39th President of the U.S. He lived to be 100 — the first ex-president in 235 years of presidents to do so.

Carter was also a highly visible altruist following his tenure in office, helping build houses for the poor via his connection with Habitat for Humanity, among other things. The former Georgia governor had been a nuclear engineer while serving in the U.S. Navy and, famously, a peanut farmer in his home town of Plains, GA. He was a progressive liberal by political orientation, and originally an outgoing advocate for the Civil Rights movement in the South.

His four years in office were at times quite turbulent, most especially pronounced by the Iran Hostage Crisis, which marred his final year as president. (The hostages were not released until the very day his successor, Ronald Reagan, took office.) But a formal remembrance of a U.S. Presidency is granted to all who have held the position, not just those with an historically favorable record during their terms.

FedSpeak Today, Following Minutes from Last FOMC Meeting

A significant number of Fed members will make public addresses today. These include Philadelphia’s Patrick Harker, Boston’s Susan Collins, Richmond’s Tom Barkin, Kansas City’s Jeffrey Schmid and Fed Governor Michelle Bowman. These speeches will no doubt be focused on the Fed’s plans for cutting interest rates in 2025.

Yesterday’s release of the minutes from the December 17-18 Federal Open Market Committee (FOMC) meeting revealed no new real surprises, though we did note an increase in concern regarding how the incoming Trump administration’s policies may augment the trajectory the economy has been on over the past four years. These include tariffs on foreign imports increasing prices of goods here in the U.S. and deporting a high number of immigrants, which threatens to gut the domestic labor force, especially on the low-income side.

Friday’s Jobs Numbers the Big News of the Week

We have seen all but one of the Jobs Week reports come out so far — JOLTS data Tuesday, ADP ADP private-sector payrolls and Weekly Jobless Claims yesterday — but the big one is the Employment Situation report from the U.S. Bureau of Labor Statistics (BLS), out Friday before the opening bell. Expectations are for 155K jobs to have been filled in December, with an Unemployment Rate holding steady at +4.2%.

Beyond this, we’ll get a glimpse at Hourly Wages — expected to come down a bit to +0.3%, with year-over-year wages remaining at +4.0%. As we saw from the ADP numbers Wednesday, which came up short of expected private-sector job fills, it is cyclical industries like Education and Healthcare leading the labor market currently, not secular areas like Leisure and Hospitality, which dominated job growth in the years directly following the Covid pandemic.

The reason Jobs Week is so key is that it holds in its hands nearly half the dual mandate the Fed has when considering monetary policy. Going back to the FOMC minutes, inflation levels have of late been holding and not falling precipitously; while it’s good we’re not seeing a hard landing in the economy, after 100 basis points in cuts there does appear to be a consensus to pause further cuts at this time. Rapidly decreasing labor force numbers over time would very likely change the Fed’s equation.

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7.

New data points to 'stable' job market amid 'low layoffs, low quits'

2025-01-08 16:23:06 by Josh Schafer from Yahoo Finance

New economic data showed showed hiring in the US labor market continues to slow, but layoffs remain low.

Data from ADP Wednesday morning showed 122,000 private payrolls were added in December, down from the 146,000 additions seen in November.

Meanwhile, the latest reading of initial jobless claims from the Department of Labor showed 201,000 claims for unemployment benefits were filed in the week ending Jan. 4, a drop of 10,000 from the previous week and below the 215,000 expected by economists.

ADP chief economist Nela Richardson told Yahoo Finance that a low number of layoffs remains key to why the labor market is "stable" for now.

"That's precisely why [we saw] stability in the 2024 labor market," Richardson said. "You had low layoffs, low quits."

But there have been signs overall of slowing in the labor market and the looming question is how far it will go. While job openings increased overall in November to their highest level since May 2023, there were further signs of what economists have described as a "no hire, no fire" stasis in the labor market.

In the November Job Openings and Labor Turnover Survey (JOLTS) report released on Tuesday, the hiring rate fell to 3.3% from the 3.4% seen in October. Meanwhile, the quits rate, a sign of confidence among workers, fell to 1.9% from 2.1% in October. Both metrics are now lower than they were before the onset of the pandemic in March 2020.

"Labor markets keep cooling," Renaissance Macro head of economics Neil Dutta wrote in a note to clients on Wednesday. "As we noted yesterday, there is more signal from the quits rate than openings."

ADP's Richardson noted right now the cooling of the labor market is playing out on the edges. White-collar workers are taking longer to find jobs, Richardson said. An increasing number of hourly workers are seeing their hours cut to the point where their yearly wages aren't outpacing inflation.

But things could flip the other way too, Richardson said, pointing to three straight monthly declines in manufacturing jobs where interest rate cuts could potentially help reinvigorate the sector.

"I don't think we say stable," Richardson said. "Economies are known to change very quickly."

The Federal Reserve remains attentive to this dynamic. Fed Chair Jerome Powell said in a press conference on Dec. 18 that the labor market is "looser than pre-pandemic." But he also highlighted that, for now, the labor market is cooling in a "gradual and orderly way."

After an extended period of waiting for the labor market to come off the boil as the central bank raised interest rates to fight against inflation, this puts its labor market goals clearly in one direction.

"We don’t think we need further cooling in the labor market to get inflation down to 2%," Powell said.

A broader update on the state of the jobs market in the US will come on Friday with the December jobs report. Consensus expects the US economy added 163,000 jobs in December, down from the 227,000 additions seen in November. Meanwhile, the unemployment rate is projected to hold steady at 4.2%.

LOS ANGELES, CALIFORNIA - JANUARY 25: An American flag flies from a crane as construction worker helps build a mixed-use apartment complex which will hold over 700 units of apartment housing and 95,000 square feet of commercial space on January 25, 2024 in Los Angeles, California. Economic data from the Commerce Department released today showed that U.S. economy expanded 3.1 percent in 2023, shaking off inflation fears and making the U.S. the fastest growing advanced economy in the world in 2023. (Photo by Mario Tama/Getty Images) — LOS ANGELES, CALIFORNIA - JANUARY 25: An American flag flies from a crane as construction worker helps build a mixed-use apartment complex which will hold over 700 units of apartment housing and 95,000 square feet of commercial space on January 25, 2024 in Los Angeles, California. (Photo by Mario Tama/Getty Images)

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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8.

Why Nvidia rug pull doesn't faze US stock market bulls: Morning Brief

2025-01-08 10:58:20 by Jared Blikre from Yahoo Finance

This 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

Nvidia just made history. Again.

On Monday, Nvidia stock closed at a record high, its first since November. Investors piled in ahead of CEO Jensen Huang’s highly anticipated CES keynote — perhaps anticipating the big reveals needed to stoke artificial intelligence hype.

Speaking to a packed audience of over 6,000 in Las Vegas, Huang laid down a bold vision for what he called the "era of physical AI."

“The ChatGPT moment for general robotics is just around the corner,” Huang declared, signaling that AI’s potential is only beginning to materialize in physical systems such as its Cosmos platform. He also spotlighted Nvidia's partnership with major automakers like Toyota and Volvo, leveraging its DRIVE Hyperion platform to power next-gen autonomous vehicles.

According to Huang, “Building autonomous vehicles, like all robots, requires three computers: one to train, one to simulate, and one in the car. And Nvidia powers them all.”

Futuristic, trillion-dollar visions of Nvidia-powered humanoid robots and self-driving cars dominated investor minds into the early morning, sending the stock to fresh record highs.

But when Wall Street opened for business with the opening bell on Tuesday, a "sell the news" fever gripped Nvidia investors, culminating in a $220 billion drop in market capitalization — its worst in four months.

It's a familiar story for Nvidia investors: a record high followed by a rug pull.

Investors got a taste of this most recently after Nvidia's Nov. 20 earnings release. The stock rocketed north of $150 for the first time, only to be met with investor selling, leading to a 13% fall.

It's also reminiscent of the June 20, 2024, pop to $140, which was met by a 27% sell-off that caused Nvidia to cede the world's largest stock title to Microsoft.

A similar story evolved around the disappointing February 2024 monthly jobs report released March 8, which sent stocks reeling. Nvidia opened at a record before posting its worst return in 10 months, leading to an eventual 20% pullback.

It's also an echo of the Aug. 23, 2023, earnings announcement that rocketed it to $50 for the first time (on a split-adjusted basis), only to see it frustrate bulls and trade sideways for four months.

The bottom line is: Nvidia might be the undisputed leader of this bull market, and it has frequently frustrated bulls. But it hasn't yet upset the general bull market in US stocks.

Paul Meeks, Harvest Portfolio Management chief investment officer, joined Yahoo Finance's Morning Brief show Tuesday following Huang's speech. Though he's a longtime Nvidia holder and bull, Meeks speculated it would take an eventual slowdown in Nvidia's growth rate quarter to quarter to turn him into a seller.

"If you wait for the year-to-year growth slowdown, you're going to [be selling] late. So I'll be looking for that sequential drop in the growth rate," he said.

Asked if Nvidia could become a $4 trillion company this year, Meeks said, "I don't think I'm bold enough to say that's definitely going to happen," adding, "But I think over the next couple of years [it's] inevitable."

For a bull, that 6% drop is merely a fly on the windshield.

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

9.

US job openings inch higher as hiring, quitting rates drop amid broader labor slowdown

2025-01-07 15:25:11 by Josh Schafer from Yahoo Finance

Job openings rose more than economists expected in November, but other signs of cooling in the labor market emerged as fewer Americans left their jobs and hiring continued to slow.

New data from the Bureau of Labor Statistics released Tuesday showed there were 8.1 million jobs open at the end of November, an increase from the 7.84 million seen in October and the highest level of job openings since May 2023.

The October figure was revised higher from the 7.74 million open jobs initially reported. Economists surveyed by Bloomberg had expected Tuesday's report to show 7.74 million openings in November.

The Job Openings and Labor Turnover Survey (JOLTS) also showed 5.27 million hires were made during the month, down from the 5.39 million made during October. The hiring rate fell to 3.3% from the 3.4% seen in October. Also in Tuesday's report, the quits rate, a sign of confidence among workers, fell to 1.9% from 2.1% in October.

Oxford Economics lead US economist Nancy Vanden Houten described Tuesday's release as consistent with a "no hire, no fire" labor market.

The quits rate and hiring rate are now lower than they were before pandemic. These signs of slowing in the labor market have prompted Fed Chair Jerome Powell to describe the labor market as "looser than pre-pandemic." But he also noted that, for now, the labor market is cooling in a "gradual and orderly way."

"We don’t think we need further cooling in the labor market to get inflation down to 2%," Powell said.

Wells Fargo senior economist Sarah House wrote in a note to clients that while the labor market has clearly shown an overall deceleration, it hasn't proved to be "a [non-linear] deterioration." This, House said, helps explain why the Fed has reiterated it will be taking a gradual approach to interest rate cuts in 2025 while it waits for further progress on inflation.

"Hiring may be easing up, but it is not collapsing," House wrote. "And while businesses are not looking for as many workers as they were a year or two ago, they are not laying off workers in droves either."

TYSONS, VA - AUGUST 22: A hiring sign is posted in front of a display at Talbots at the Tysons Corner Center mall on August 22, 2024 in Alexandria, Virginia. According to reports, over 800,000 fewer jobs were created within the U.S. economy than originally reported in the 12-month period, 30% less than the previously reported 2.9 million from April 2023 through March, 2024. (Photo by Anna Rose Layden/Getty Images) — TYSONS, VA - AUGUST 22: A hiring sign is posted in front of a display at Talbots at the Tysons Corner Center mall on August 22, 2024 in Alexandria, Virginia. (Photo by Anna Rose Layden/Getty Images)

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

10.

1 Tech ETF Set to Outperform as Agentic and Physical AI Transform 2025

2025-01-06 11:15:00 by George Budwell, The Motley Fool from Motley Fool

Wall Street analysts expect solid market gains in 2025. The S&P 500 consensus outlook projects a 9% rise in the benchmark index, offering investors a potential total return of 10.2% including dividends.

However, artificial intelligence (AI) investments could drive even stronger returns this year. Based on Wall Street consensus estimates, the Invesco QQQ Trust (NASDAQ: QQQ), a technology-focused exchange-traded fund (ETF), should deliver a robust 15.5% gain, with total returns approaching 16% after accounting for dividends and its modest 0.20% expense ratio.

Hologram of the letters AI hovering above a circuit board. — Image Source: Getty Images.

Here's why three major AI catalysts could drive this outperformance versus the S&P 500 in 2025.

Catalyst No. 1: The great data center hyperbuild

Big tech isn't playing around when it comes to ramping up its computing power. Microsoft alone plans to spend $80 billion on AI-enabled data centers in fiscal 2025, with over half of this investment targeted for the United States. This unprecedented capital deployment highlights the scale of infrastructure needed to power next-generation AI systems and the ongoing AI arms race occurring both within the U.S. tech landscape and between the U.S. and China more broadly.

Where is this trend heading? Industry forecasts project AI-ready data center capacity will grow at a blistering 33% annual rate through 2030, creating sustained demand for hardware, software, and services from the Invesco QQQ Trust's top technology holdings, such as Nvidia (NASDAQ: NVDA) and Microsoft.

The bottom line is that the AI data center hyperbuild will remain a key theme for several more years, which should put wind in the sails of many of the ETF's core holdings in 2025. For this reason alone, the Invesco QQQ ought to continue to outperform the broader market, represented by the S&P 500, in 2025.

Catalyst No. 2: The rise of agentic AI

The next wave of AI isn't just about raw computing power. Nvidia CEO Jensen Huang predicts 2025 will mark a watershed moment for AI in business operations, with new AI agents capable of automating up to 50% of tasks across roles from customer service to supply chain management. This shift from experimental technology to widespread deployment could accelerate enterprise spending on AI solutions.

The race to capture this market is already heating up. Salesforce has launched its Agentforce platform for business automation, while several other major tech firms are pouring resources into competing solutions. This rapid development cycle should drive significant revenue growth for the fund's enterprise software leaders throughout 2025 and beyond.

Catalyst No. 3: Physical AI takes center stage

Humanoid robots are no longer science fiction. Nvidia is launching Jetson Thor in early 2025, a new generation of compact computers designed for these advanced machines. The chipmaker aims to provide the computing backbone for robot manufacturers worldwide, opening up a new revenue stream beyond its core AI chip business.

Why does this matter for investors? The push into physical AI significantly expands the addressable market for many of the fund's top holdings. The robotics revolution creates multiple paths to revenue growth for the Invesco QQQ Trust's top technology leaders, from the chips powering these machines to the software controlling them.

Transforming tech, transforming returns

The Invesco QQQ Trust offers investors concentrated exposure to the companies leading these three transformative trends. While the technology sector can experience periods of volatility, the convergence of massive data center investments, agentic AI deployment, and robotics advancement creates powerful tailwinds for 2025.

The tech giants in this fund are pouring billions into AI development to maintain their market leadership. With consensus forecasts pointing to market-beating returns from these powerful catalysts, the Invesco QQQ Trust offers investors a simple and cost-effective way to capture the emerging value from this megatrend without picking individual stocks.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $885,388!*

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*Stock Advisor returns as of December 30, 2024

George Budwell has positions in Microsoft and Nvidia. The Motley Fool has positions in and recommends Microsoft, Nvidia, and Salesforce. 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.

1 Tech ETF Set to Outperform as Agentic and Physical AI Transform 2025 was originally published by The Motley Fool

11.

Jobs report highlights first full-on trading week of 2025: What to know this week

2025-01-05 12:38:38 by Josh Schafer from Yahoo Finance

US stocks have been slumping heading into the first full-on week of 2025.

In the past five trading sessions, the S&P 500 is down more than 1.5%, while the Nasdaq Composite is off nearly 2%. Meanwhile, the Dow Jones Industrial Average is lower by about 1.5%.

In the week ahead, a crucial run of labor market data is set to greet investors, with Friday morning's December 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 sectors, are also on the schedule.

That data will provide a final snapshot of the labor market before the Fed's next meeting on Jan. 30-31.

In corporate news, investors will watch for key announcements from tech companies such as Nvidia (NVDA) during the Consumer Electronics Show. Meanwhile, Delta (DAL) and Constellation Brands (STZ) are expected to report quarterly results.

Another shortened week of stock trading lies ahead with markets closed Thursday to mourn the death of former President Jimmy Carter.

A look at labor

The labor market cooled in 2024, but the Federal Reserve appears confident in its trajectory.

In his final press conference of the year on Dec. 18, Fed Chair Jerome Powell described the labor market overall as "good," noting that the "downside risks" that emerged in the summer of 2024 as the unemployment rate spiked "appear to have diminished."

"The labor market is now looser than pre-pandemic, and it’s clearly still cooling further, so far in, in a gradual and orderly way," Powell said. "We don’t think we need further cooling in the labor market to get inflation down to 2%."

Economists expect incoming data to show more gradual cooling. The December jobs report is expected to show the US labor market added 153,000 jobs in the month, down from the 227,000 seen in November. Meanwhile, the unemployment rate is expected to hold steady at 4.2%.

"The labor market is on solid footing, but employment growth slowed and overall labor market conditions cooled in 2024," Morgan Stanley US economist Sam Coffin wrote in a note to clients. "The good news is the labor market is not softening as suddenly as it appeared to do last summer."

As of Friday afternoon, markets were pricing in just an 11% chance the Fed cuts rates at its January meeting, per the CME FedWatch Tool.

A big week for tech

The CES tech conference kicks off on Monday with a keynote speech from Nvidia CEO Jensen Huang. An analyst question and answer session is also slated for Tuesday.

Nvidia stock is down more than 1% since reporting earnings after the bell on Nov. 20 amid concerns over delays of shipments of its new Blackwell chip. Nvidia shares still ended 2024 up more than 150%.

Bank of America’s Vivek Arya told Brian Sozzi on the Opening Bid podcast Thursday that broader market forces and company-specific issues drove the sell-off in Nvidia stock late last year. "What we have seen in the market is a rotation of money from semiconductors to software," Arya said, noting that the latter was less exposed to US trade restrictions on goods to and from China.

He added that for Nvidia, "the last two quarters have not been clean, really, because they're going through growing pains from one generation of product that was Hopper to the new generation of product."

No Santa for markets this year

The historically best seven-day stretch of the year for the S&P 500 came and went without any gains. Since 1950, the S&P 500 has risen 1.3% during the seven trading days beginning Dec. 24 amid the so-called Santa Claus rally.

But this year, the index fell about 0.5%. LPL Financial chief technical strategist Adam Turnquist wrote in a note to clients that when the S&P 500 has a negative return over this time period, it usually points to a weaker year for stocks.

Though, as we noted last week, last year didn't feature a Santa Claus rally either, and the S&P 500 still rose roughly 24% in 2025.

"I don't know how far the market falls from here," Ritholtz Wealth Management chief market strategist Callie Cox told Yahoo Finance. "I certainly don't assign too much weight to seasonal patterns. Just because the market is falling during the Santa Claus rally period doesn't mean that we're doomed."

One key catalyst could come with next week's jobs report. As a recent rise in the 10-year Treasury yield (^TNX) near 4.6% has helped contribute to the sour sentiment around stocks, Piper Sandler chief markets strategist Michael Kantrowitz believes relief could be on the way.

"We think we need to see softer employment to get rates to start coming down," Kantrowitz said in a video to clients on Friday.

Whether the soft data comes in the week ahead or later in the first quarter, Kantrowitz believes this narrative shift from the rising rate environment could help "get equities going once again."

Weekly Calendar

Monday

Economic data: S&P Global US manufacturing PMI, December final (58.3 expected, 58.5 previously); S&P Global US composite PMI, December final (56.6 previously); Factory Orders, November (-0.3% expected, +0.2% prior); Durable Goods Orders, November final (-0.3% expected, -1.1% prior)

Earnings: No notable earnings releases.

Tuesday

Economic data: Job openings, November (7.7 million expected, 7.74 million previously); ISM Services Index, December (53.1 expected, 52.1 prior)

Earnings: Cal-Maine Foods (CALM)

Wednesday

Economic data: MBA Mortgage Applications, week ended Jan. 3; ADP Private Payrolls, December (+130,000 expected, +146,000 previously); FOMC December meeting minutes

Earnings: Albertsons (ACI), Helen of Troy (HELE), Jefferies (JEF)

Thursday

Economic data: Challenger jobs cuts, year-over-year, December (+26.8% previously); Initial jobless claims, week ending Jan. 4 (211,000 previously)

Earnings: KB Home (KBH)

NYSE and Nasdaq close to mark national day of mourning for former President Jimmy Carter. Nasdaq bond markets will stop trading early.

Friday

Economic calendar: Nonfarm payrolls, December (+153,000 expected, +227,000 previously); Unemployment rate, December (4.2% expected, 4.3% previously); Average hourly earnings, month-over-month, December (+0.3% expected, +0.4% previously); Average hourly earnings, year-over-year, December (+4% expected, +4% previously); Average weekly hours worked, December (34.3 expected, 34.3 previously); Labor force participation rate, December (62.5% previously)

Earnings: Constellation Brands (STZ), Delta (DAL), Tilray (TLRY), Walgreens Boots Alliance (WBA)

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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12.

Wish You'd Bought Palantir in 2024? Buy This Unstoppable ETF Instead

2025-01-05 11:22:00 by Adam Spatacco, The Motley Fool from Motley Fool

It's official: 2024 is in the books and all eyes are on what this year will bring.

As expected, artificial intelligence (AI) stocks continued to pave the way for market-beating returns last year. While the "Magnificent Seven" held their own, a new player in the AI realm trumped all of megacap tech. Shares of Palantir Technologies (NASDAQ: PLTR) soared by 350% during 2024 -- making it the best-performing stock among the S&P 500 (SNPINDEX: ^GSPC) index.

While shares of Palantir could very well continue to witness outsized gains this year, I'd caution investors against following too much momentum. Instead, if you're interested in gaining exposure to the AI industry and want access to leading opportunities fueling the movement, I'd suggest taking a look at the Invesco QQQ Trust (NASDAQ: QQQ).

Below, I'll break down why this particular exchange-traded fund (ETF) is poised to be a big winner in 2025 and beyond.

Why 2025 should be another monster year for tech stocks

Since the Nasdaq was formed in 1971, the index has only posted consecutive negative returns on two occasions. The last time such a trend happened was between 2000 and 2002, when the Nasdaq dropped by 39%, 21%, and 31%.

However, as is always the case with the capital markets, the Nasdaq demonstrated its resiliency following three consecutive years of declines. Starting in 2003, the index went on to post gains for five years in a row -- a run that ended in 2008 during the Great Recession.

Considering that stocks are currently riding the wave of a bull market and the empirical trends explored above, it's more likely than not that the Nasdaq will extend the gains it's witnessed over the last two years in 2025. As such, investors may want to keep technology stocks on their radar.

Nasdaq 100 index on computer screen. — Image source: Getty Images.

How has Invesco QQQ performed in recent years?

The chart below illustrates the stock price performance of Invesco QQQ since January 2020. The grey-shaded column represents the brief, albeit important, COVID-19 recession. As the graph shows, the lowest price for Invesco QQQ over the last four years occurred during the COVID-19 pandemic -- when shares closed at $169.

However, shares of the ETF rose considerably as pandemic fears waned throughout the latter portion of 2020 and 2021. The next time the fund experienced a pronounced sell-off was during 2022 -- a year in which the Nasdaq declined by 33% (its largest decline since 2008). Remember, 2022 was a tough year for the stock market in general as concerns surrounding the macroeconomy mounted over abnormally high levels of inflation.

Even so, Invesco QQQ still traded at materially higher prices when compared to lows seen during the early days of the COVID-19 pandemic. I make this point to underscore the resiliency of the capital markets, and Invesco QQQ in particular.

Why Invesco QQQ is my top choice among technology-focused ETFs

Admittedly, there are loads of options for technology-focused ETFs. The reason I prefer Invesco QQQ is due to its specific theme, which tracks the Nasdaq-100.

When you invest in Invesco QQQ, you are gaining passive exposure to some of the most influential AI stocks available, including each of the "Magnificent Seven" stocks as well as other compelling names such as Broadcom and Palantir. Furthermore, the fund also provides exposure to growth industries such as cybersecurity and streaming through positions in CrowdStrike and Netflix, and even gives investors some international exposure via e-commerce leaders MercadoLibre and PDD Holdings.

While the Nasdaq-100 is mostly concentrated in technology stocks, there are also some other solid picks in industries such as the consumer discretionary market including Airbnb, Costco, and PepsiCo. Each of these stocks is also held in the Invesco QQQ ETF.

Invesco QQQ provides investors with a diverse group of growth stocks and is composed of a healthy mix of opportunities in AI, consumer, and other market sectors as well. Given that history is on the side of the Nasdaq for 2025 and Invesco QQQ's positive track record, I think investing in the fund is a no-brainer for investors with a long-run time horizon.

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Wish You'd Bought Palantir in 2024? Buy This Unstoppable ETF Instead was originally published by The Motley Fool

13.

Here's where Wall Street sees stocks heading after the best 2-year stretch since '97-'98

2024-12-31 21:15:10 by Josh Schafer from Yahoo Finance

After two consecutive years of more than 20% gains for the S&P 500 (^GSPC) — an achievement not seen since the late 1990s — Wall Street strategists foresee a slower pace of gains for the benchmark index in 2025.

With strong earnings expected from a widespread array of companies in 2025 and US economic growth anticipated to remain resilient, the fundamental story for further market increases remains intact for 2025. But strategists have warned about a more volatile year for stocks as uncertainty surrounding Federal Reserve rate cuts and a new Donald Trump administration loom ahead.

"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," BMO Capital Markets chief investment strategist Brian Belski wrote in his 2025 outlook. "So we believe 2025 will likely [be] defined by a more normalized return environment with more balanced performance across sectors, sizes, and styles."

Belski initiated a 2025 year-end target of 6,700 for the S&P 500. Given his 6,100 call for the end of 2024, Belski's forecast returns in 2025 at 9.8%, right in line with the index's average historical gain.

The median year-end target for the S&P 500 among strategists tracked by Yahoo Finance sits at 6,600. This would represent about a 12% increase from the index's current level. The targets reach as high as Oppenheimer's 7,100 and as low as Sitfel's "mid 5000s" projection — the lone call among 17 strategists tracked by Yahoo Finance for the benchmark index to fall in the coming year.

Less 'magnificent' performance

In one sign of equities' resiliency, Goldman Sachs chief US equity strategist David Kostin and others say the market could surge higher even without the "Magnificent Seven" tech stocks' massive outperformance continuing in 2025.

Through three-quarters of reports, the combination of Apple (AAPL), Alphabet (GOOGL, GOOG), Microsoft (MSFT), Amazon (AMZN), Meta (META), Tesla (TSLA), and Nvidia (NVDA) grew earnings year over year by 33% in 2024, compared to just 4.2% growth for the other 493 S&P 500 companies, per FactSet data.

But that margin is projected to fall to just 8 percentage points in 2025, per consensus estimates. This, Kostin believes, will lead to that cohort beating the other 493 stocks by just 7 percentage points in 2025, the narrowest level of outperformance from the Magnificent Seven dating back to 2018.

"The narrowing differential in earnings growth rates should correspond with a narrowing in relative equity returns," Kostin wrote. "Although the 'micro' earnings growth story supports continued ‘Magnificent 7’ outperformance, more 'macro' factors such as economic growth and trade policy lean in favor of the S&P 493."'

A resilient US economy

RBC Capital Markets' Lori Calvasina cited growth stocks as a "crowded" trade, leading to the potential for more flows into the value side of the market.

Importantly, Calvasina's call relies on another commonly held belief among Wall Street bulls headed into 2025: US economic growth will continue to surprise to the upside.

"For Value to outperform, in recent years we’ve needed to see GDP run a bit hotter," said Calvasina, who sees GDP in a range of 2.1% to 3% in 2025, above the current Bloomberg consensus of 2.1%. "We’ve given an edge to the broadening of market leadership or the shift into Value but think it’s a close call."

Bank of America's Savita Subramanian agreed. The Bank of America economics team projects the US economy will grow at an annualized rate of 2.4% in 2025, also higher than Bloomberg consensus forecasts for 2.1% growth.

This has BofA favoring "GDP sensitive companies," with the firm recommending Overweight ratings on Financials (XLF), Consumer Discretionary (XLY), Materials (XLB), Real Estate (XLRE), and Utilities (XLU) sectors.

A close look at Calvasina's work shows why economic growth meeting or exceeding positive expectations could be crucial to the stock market rally. Dating back to 1947, annual GDP has grown between 1.1% and 2% five times. Stocks were higher just 40% of the time 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%.

There is, of course, a chance the growth doesn't deliver. UBS asset management's Evan Brown told Yahoo Finance at its 2025 outlook roundtable that given so many strategists are already expecting a resilient economy, anything less than that could weigh on equities. When considering that US equity valuations are already rich, Brown said it "doesn't take much" to change the widely held beliefs that the US economy and equities will outperform the rest of the world in 2025.

The known unknowns

Indeed, despite bullish prospects for the market, there are key risks to strategists' calls that could lead to more volatility in 2025.

One is the potential for a resurgence in inflation. The Federal Reserve earlier this month projected that core inflation will hit 2.5% next year — higher than its previous projection of 2.2% — before cooling to 2.2% in 2026 and 2% in 2027.

Stifel chief investment strategist Barry Bannister sees sticky inflation prompting the Federal Reserve to hold interest rates high as economic growth weakens. These factors may serve as key catalysts to the eventual pullback in the stock market rally, which could result in the S&P 500 ending 2025 in the "mid-5000s."

It's far from a consensus call. But Bannister's base case highlights the known unknowns many Wall Street strategists discussed in their 2025 equity outlooks. Uncertainty about what the new Trump administration will bring is expected to continue to be a market theme in the new year. Some of President-elect Donald Trump's proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and immigration curbs, are considered potentially inflationary.

"Stocks can weather this out, and they can ... fare well in the long term, but not without some significant disruption, especially because a lot of these policies we just haven't seen before," Charles Schwab senior investment strategist Kevin Gordon told Yahoo Finance.

FILE - The 2025 New Year's Eve numerals are displayed in Times Square, on Dec. 18, 2024, in New York. (AP Photo/Julia Demaree Nikhinson, File) — The 2025 New Year's Eve numerals are displayed in Times Square, on Dec. 18, 2024, in New York. (AP Photo/Julia Demaree Nikhinson, File)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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14.

10 stocks retail investors craved in 2024

2024-12-31 16:12:31 by Brian Sozzi from Yahoo Finance

Retail investors enjoyed another banner year by sticking with tried-and-true large-cap tech names that raked in big profits and promised advances in artificial intelligence.

Vanda Research estimated the year will end with about $265 billion in net new inflows into US markets by self-directed retail investors. While that is $25 billion less than the previous three years' average, based on Vanda Research's data, it's still within the post-COVID-19 range — indicating a healthy appetite for the average investor to be engaged with markets.

The six corporate tickers with the most retail investor inflows were a who's who of tech momentum trades: AMD (AMD), Nvidia (NVDA), Apple (AAPL), Palantir (PLTR), Tesla (TSLA), and Amazon (AMZN). These five names pulled in $67.7 billion in total retail inflows this year. Nvidia overtook Tesla as the most popular stock among retail investors, at least judging by inflows.

Nvidia has pulled in $29.8 billion in retail net inflows this year, per Vanda Research's findings, up from $11.4 billion last year. Tesla's retail inflows dropped to $14.7 billion from $48 billion in 2023.

Tesla still edged out Nvidia as the top holding in retail investor portfolios, however — representing a 10.58% average portfolio weighting compared to 10.33% for Nvidia.

The other four top tickers were more index-based trades levered to popular themes such as AI: Direxion Daily Semiconductor Bull 3X Shares (SOXL), Invesco QQQ Trust (QQQ), ProShares UltraPro QQQ (TQQQ), and SPDR S&P 500 (SPY).

"2024 was an eventful year for markets," Vanda Research senior vice president Marco Iachini said. "For the average retail investor, it was another great year of portfolio performance. Loyalty to tech names paid off."

Retail investors' portfolios beat S&P, Nasdaq

Indeed that tech loyalty did pay off.

Vanda Research estimates that the average retail portfolio is up 40.74% this year, the second-highest performance since 2014. Only 2023's 41.94% performance was better over this 10-year time span.

On a flow-adjusted basis, Vanda Research noted that this would mark the second time retail investors have beaten the S&P 500 (^GSPC) in back-to-back calendar years and the first time since 2014 that the non-institutional crowd beat the Nasdaq Composite (^IXIC).

Whether the feel-good times for retail investors will continue in 2025 is anyone's guess.

On the positive side, the incoming Trump administration has promised business-friendly policies such as cutting government spending through the Elon Musk-led Department of Government Efficiency (DOGE) and extending tax cuts.

“I’m not saying it’s going to be perfect, but I’m saying the possibilities of us doing very well over the span of the next few years is significant,” Joe Moglia, former CEO of TD Ameritrade, said on Yahoo Finance's Opening Bid podcast (listen below).

But the markets are poised to enter January on a whimper despite potential pro-growth Trump policies as the outlook for Fed policy has become increasingly uncertain.

The consensus among Fed officials is now for two rate cuts next year after its December meeting, down from four previously forecast in September, as the monetary policy body remains concerned about the inflationary outlook. The outlook for inflation is further clouded by potential moves by the incoming Trump administration, such as possibly inflationary tariffs on China.

In a new interview on Yahoo Finance's Opening Bid, San Francisco Fed president Mary Daly didn't rule out a potential rate hike.

The S&P 500 and Dow Jones Industrial Average are down 2% and 5%, respectively, in December. The Nasdaq Composite is up 1.4%.

Market leader Nvidia is down 1% in December.

"The stock market in 2025 will likely experience fluctuations, but significant opportunities are seen in individual stock picks, especially in sectors like EVs, AI, healthcare, and quantum computing," MarketGauge chief strategist Michele Schneider told Yahoo Finance. "Tax cuts and deregulation could spur growth, although tariffs and inflation remain risks. The year may start under pressure but rally towards the middle to end of the year posting modest gains, with a potential stagflation environment prevailing until mid-2026."

None of Schneider's top stock picks for 2025 would qualify as typical retail investor favorites: AbbVie (ABBV), Kratos (KTOS), International Business Machines (IBM), Salesforce (CRM), Coinbase (COIN), Chewy (CHWY), Ulta Beauty (ULTA), Alibaba (BABA), and Rivian (RIVN).

But hey, maybe they will garner some retail investor attention.

StockStory aims to help individual investors beat the market.

Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

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15.

10 charts that tell the story of markets and the economy in 2024

2024-12-30 11:00:44 by Josh Schafer from Yahoo Finance

Stocks ended 2024 near record highs.

Over the past 12 months, the Nasdaq Composite (^IXIC) has rallied 30% and the S&P 500 (^GSPC) has climbed over 24%. Meanwhile, the blue-chip Dow Jones (^DJI) has risen a more modest 13%.

Despite declines in the market to end the year, investors have found reasons to be optimistic about the future based on major headlines this past year. The Federal Reserve made its first interest rate cut in roughly four years in 2024. Meanwhile, news of a changing of the guard in the White House drove stocks higher.

Earnings growth accelerated. The market rally finally began to broaden. And despite a brief growth scare that spooked investors in late summer, the US economy is ending 2024 on solid footing.

Below is a collection of 10 charts that tell the story of market and economic resiliency in 2024 — with all eyes set on 2025.

The bull market roars on

It was a record-setting year on Wall Street, with the S&P 500 clinching 57 records to fall into the top five years for most all-time highs recorded by the benchmark index.

Two years into the bull market, strategists pin the rally on strong corporate earnings and outsized momentum from several members of the "Magnificent Seven" tech stocks, which include chipmaker Nvidia (NVDA), along with Tesla (TSLA), Alphabet (GOOGL, GOOG), Amazon (AMZN), Apple (AAPL), Microsoft (MSFT), and Meta (META).

Earnings picked up across sectors in 2024, with growth finally expanding beyond the "Magnificent Seven" names as the other 493 S&P 500 companies exited their earnings recession.

With S&P 500 earnings expected to grow 15% year over year in 2025, per FactSet data, a continued expansion of earnings growth is a key catalyst many bullish strategists are watching.

"The weight of evidence suggest the primary market trend remains higher, driven by earnings growth in 2025," Truist co-chief investment officer Keith Lerner wrote in his 2025 market outlook.

While a broadening of the stock market rally was a theme for parts of the year, the Magnificent Seven still posted another banner year.

Nvidia rallied more than 175%. Meanwhile, Alphabet, Amazon, Tesla, and Meta all rose 30% or more and outpaced both the Nasdaq Composite and S&P 500.

This leaves the benchmark index continuously concentrated in just a few large names. As of Dec. 23, the 10 largest stocks in the S&P 500 accounted for 39.9% of the index's market cap, per Charles Schwab senior investment strategist Kevin Gordon. That's the largest share seen in at least the last 30 years.

A presidential election like no other

In the midst of a banner year for stocks, another history-setting event took place: the 2024 presidential election.

Donald Trump defeated Vice President Kamala Harris in what became one of the most unique races in recent memory after current commander in chief Joe Biden dropped out of the race with just about three months to go before Election Day.

An assassination attempt on Trump and his criminal indictment, along with other headlines, made for quite the ride heading into Nov. 5 — and certain sectors of the stock market reacted in tandem with the developments.

Immediately following Trump's win, small caps surged, with the Russell 2000 (^RUT) outperforming the leading market indexes the day after the election. Small caps have since erased their gains but are still up about 11% since the start of the year.

For context, that's less than half of the S&P 500 gains over that same time period.

Companies within the small-cap index, which include regional banks and smaller domestic players, are expected to benefit from anticipated policies out of the Trump administration like lower taxes and deregulation.

Tariffs, which Trump has consistently teased, have also pushed the dollar higher, a benefit for small-cap companies, which tend to be more levered to the domestic economy compared to more internationally oriented large-cap stocks.

But tariffs are also expected to lead to stickier inflation and keep interest rates higher over the long term. That possibility has boosted long-term Treasury yields, with the 10-year note trading at around 4.6%, a seven-month high.

Meanwhile, sectors like energy and financials also jumped in the aftermath of Trump's victory due to expectations of more M&A, a steeper yield curve, and less regulation. Similar to small caps, though, gains within those sectors were mostly short-lived.

Bitcoin (BTC-USD) has been the exception. The largest cryptocurrency has surged over 130% since the start of the year and remains one of the biggest beneficiaries of the post-election rally.

Trump's win pushed bitcoin prices to all-time highs, with the administration viewed as generally friendly to the alternative asset class.

Although the cryptocurrency lost some momentum after exceeding $100,000, investors and analysts remain mostly bullish heading into 2025.

In July, Trump attended a bitcoin conference in Nashville and has since pledged to usher in more supportive regulation. His promises also included appointing a crypto Presidential Advisory Council and firing current SEC Chair Gary Gensler, who announced he would step down on Jan. 20.

A complicated outlook

The US economy has been resilient throughout 2024. Retail sales once again topped estimates for the month of November, GDP remains strong and above trend, the unemployment rate continues to hover at around 4%, and despite its bumpy path down to 2%, inflation has moderated.

That positive backdrop means investors have grown increasingly confident the US economy will achieve a "soft landing," in which prices stabilize and unemployment remains low.

But the election of Donald Trump has complicated the outlook.

"The risks are certainly tilted in the direction of higher inflation," Nancy Vanden Houten, lead US economist at Oxford Economics, told Yahoo Finance. "A lot of the risk comes from the possibility of certain policies being implemented under the Trump administration on tariffs and on immigration."

President-elect Donald Trump's proposed policies, such as high tariffs on imported goods, tax cuts for corporations, and curbs on immigration, are considered potentially inflationary by economists. On top of those fears, inflation continues to be sticky, pressured by recent hotter-than-expected readings on monthly "core" price increases, which strip out volatile food and energy costs.

In November, the core Personal Consumption Expenditures (PCE) index and the core Consumer Price Index (CPI), both closely tracked by the central bank, rose 2.8% and 3.3%, respectively, over the prior-year period.

According to updated economic forecasts from the Fed's Summary of Economic Projections (SEP), central bank leaders see core inflation hitting 2.5% in 2025 — higher than September's projection of 2.2% — before cooling to 2.2% in 2026 and 2.0% in 2027.

"We've had a year-end projection for inflation, and it's kind of fallen apart as we approach the end of the year," Federal Reserve Chair Jerome Powell said at the Fed's final policy meeting of the year on Dec. 18. "I can tell you that might be the single biggest factor — inflation has once again underperformed relative to expectations."

But wrangling inflation is not the only goal for the Fed. The jobs market is also a critical part of its dual mandate — and upholding that strength will be paramount for the health of stocks and the US economy.

The unemployment rate oscillated throughout the year but has remained mostly steady at around 4%.

In July, the rate hit its highest level of 2024 — 4.3% — and triggered a closely tracked recession indicator known as the Sahm Rule. Typically, the rule suggests the US economy has entered a recession if the three-month average of the national unemployment rate has risen 0.5% or more from the previous 12-month low. In essence, once the unemployment rate starts moving higher, it rarely reverses course.

But economists, including the rule's inventor, Claudia Sahm, were quick to point out that the indicator may not be flashing a red warning sign this time around, given other factors at play in the economy.

After a brief market sell-off following a weaker-than-expected July jobs report as investors grew wary of the growth outlook for the US economy, markets rallied back. The unemployment rate's rapid rise subsided and the labor market appeared to be cooling, but not at the quickly concerning pace many had feared.

While the unemployment rate's swift ascent didn't fully take hold in 2024, a clear picture of a slowing labor market formed. Economists have begun using the phrase "low hire, low fire" when defining the current state of the labor market. Largely, it's seen as sitting in a place that would be consistent with a "soft landing," where inflation eventually falls to the Fed's 2% target without the economy spinning into a recession.

The chart below shows how the hiring and quits rates have both moved lower throughout 2024 and now sit at lower levels than seen just before the onset of the pandemic in 2020. Data like this demonstrates how the labor market came off the boil in 2024 and has prompted the Federal Reserve to no longer seek further cooling on that side of its dual mandate.

"Downside risks to the labor market do appear to have diminished, but the labor market is now looser than pre-pandemic and it's clearly still cooling further," Powell said on Dec. 18. "So far, in a gradual and orderly way. We don't think we need further cooling in the labor market to get inflation down to 2%."

Fed's easing cycle in focus

The Federal Reserve lowered interest rates by 25 basis points to a range of 4.25%-4.5% at its final meeting of the year and signaled it would slow down the pace of its cuts after slashing interest rates by a total of 100 basis points in 2024.

Fed officials see the fed funds rate falling to 3.9% in 2025, higher than the Fed's previous September projection of 3.4%. Outside of September's jumbo 50 basis point cut, the Fed has moved in 25 basis point increments over the last year or so, indicating the central bank expects to cut interest rates two more times in 2025. In September, officials had projected four cuts.

Heading into the decision, markets were pricing in two to three additional rate cuts in 2025, according to Bloomberg data. That's now shifted to between one and two cuts.

In 2026, officials see two additional cuts, bringing the fed funds rate down to 3.4%. In September, officials had pegged interest rates to come down to 2.9% in 2026.

The updated projections suggest the Federal Reserve will take a more cautious approach after launching its long-awaited easing cycle earlier this year.

As 2024 comes to a close, strategists are encouraged by the story the charts above tell. While the Fed expects to cut interest rates less than initially hoped, the economy remains on solid footing for now and corporate earnings are expected to keep growing in the year ahead.

Of the 17 strategists with S&P 500 targets for the end of 2025, just one sees the benchmark index ending 2025 lower. With a high-water mark of 7,100, the median target sits at 6,600, reflecting a roughly 11% increase from current levels.

When detailing a case for the S&P 500 to end 2025 at 7,007, Wells Fargo equity strategist Christopher Harvey wrote 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, offering similar sentiments to how many on Wall Street feel about 2025, barring unexpected shocks.

"2025 is likely to be a solid-to-strong year," Harvey wrote.

Josh Schafer and Alexandra Canal are both Senior Reporters at Yahoo Finance.

Click here for the latest stock market news and in-depth analysis, including events that move stocks

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16.

Stock market enters final stretch of 2024: What to know this week

2024-12-29 12:47:21 by Josh Schafer from Yahoo Finance

The market is entering the final two trading days of 2024, and stocks are set to post another strong year of gains.

The Nasdaq Composite (^IXIC) once again led the charge in 2024, rising more than 30% thus far while the S&P 500 (^GSPC) has risen over 25%. The Dow Jones Industrial Average (^DJI) is up a more modest 14%.

A holiday-shortened trading week with limited news on the docket is expected to greet investors in the final trading week of the year. Markets will be closed for New Year's Day on Wednesday, and no major companies are slated to report quarterly results.

In economic data, updates on housing prices and sales, as well as a a look at activity in the manufacturing sector, are expected to highlight a subdued week of releases.

Where's Santa?

Markets are three days into the highly anticipated "Santa Claus" rally, which is statistically one of the most consistent seven-day positive stretches of the year for the S&P 500.

But stocks have not been in the holiday spirit. All three major averages sold off Friday, with the Nasdaq falling nearly 1.5%.

Since 1950, the S&P 500 has risen 1.3% during the seven trading days beginning Dec. 24, well above the typical seven-day average of 0.3%, according to LPL Financial chief technical strategist Adam Turnquist. History has shown that if Santa does come and the S&P 500 posts a positive return during the time period, then January is typically a positive month for the benchmark index and the rest of the year averages a 10.4% return.

When the S&P 500 is negative during that time frame, January usually doesn't end in the green, and the return for the upcoming full year averages just 5%, per Turnquist. Three days into this year's Santa Claus period, which will close on Friday, Jan. 3, the S&P 500 is down less than 0.1%

While history may be flashing a warning sign, it's notable that last year the Santa Claus rally didn't materialize. January started poorly too. Still, the S&P 500 is still set to end the year up more than 20%.

Rising rates

As markets have digested the Federal Reserve's recent message that interest rates may remain higher for longer than investors had hoped, bond yields have been soaring. The 10-year Treasury yield (^TNX) is up more than 40 basis points in December alone.

Hovering right above 4.6%, the 10-year is at its highest level in about seven months and in the territory where equity strategists believe higher rates could begin to weigh on stock performance.

"I think 4.5% or higher on the 10-year gets problematic for the markets more broadly," Piper Sandler chief investment strategist Michael Kantrowitz said in a recent video sent to clients.

Kantrowitz further clarified in an interview with Yahoo Finance's Market Domination that any incoming economic data that sends rates lower could be a welcome sign for stocks.

"In the last couple of years, really markets have only gone down because of rising interest rate or inflation fears," Kantrowitz said on Dec. 18. "And I think that's the new normal that going forward. Market corrections are going to come from higher rates, not slower growth or higher unemployment."

All about fundamentals

Despite the recent drawdown in markets since the Fed meeting on Dec. 18, the setup heading into 2025 "has really not changed," Citi US equity strategist Scott Chronert wrote in a note to clients on Friday.

Stock valuations remain high. Earnings are expected to grow about 15% year over year for the S&P 500, per FactSet data, creating a "high bar" to impress investors. US economic growth is largely expected to remain resilient.

"In aggregate, investors appear bulled up on US equities," Chronert wrote.

This has pushed market sentiment, as measured by Citi's Levkovich Index, increasingly higher. The Levkovich Index, which takes into account investors' short positions and leverage, among other factors, to determine market sentiment, currently sits at a reading of 0.62, above the euphoria line of 0.38, where the likelihood of positive forward returns is typically lower as the market appears stretched.

For now, this isn't shaking Chronert's overall confidence in the US equity market. He noted that the "fundamentals" that have driven the market rally remain intact.

But strategists argue that stretched sentiment and valuations do put the market rally on thinner ice should a catalyst that challenges the bull thesis for 2025 emerge.

"Overall, this setup, plus the lack of real correction in some time, does leave the market more susceptible to increasing bouts of volatility," Chronert wrote. "If the fundamental story holds, we would be buyers of first half pullbacks in the S&P 500."

FIL:E - People photograph the New York Stock Exchange in New York's Financial District on Dec. 23, 2024. (AP Photo/Peter Morgan, File) — People photograph the New York Stock Exchange in New York's Financial District on Dec. 23, 2024. (AP Photo/Peter Morgan, File)

Weekly Calendar

Monday

Economic data: MNI Chicago PMI, December (42.8 expected, 40.2 prior); Pending home sales month-over-month, November (0.9% expected, 2% prior); Dallas Fed manufacturing activity, December (-1.5 prior, -2.7 prior)

Earnings: No notable earnings.

Tuesday

Economic data: S&P CoreLogic 20-City year-over-year, October (+4.11% expected, +4.57% prior); Dallas Fed Services Activity, December (9.8 prior)

Earnings: No notable earnings.

Wednesday

Markets are closed for New Year's Day.

Thursday

Economic data: MBA mortgage applications, week ending Dec. 20 & week ending Dec. 27, Initial jobless claims, week ending Dec. 28 (219,000 expected); S&P Global US manufacturing PMI, December final (48.3 expected, 48.3 prior); Construction spending month-over-month, November (+0.3% expected, +0.4% prior)

Earnings: No notable earnings.

Friday

Economic calendar: ISM manufacturing, December (48.3 prior, 48.4 prior); ISM prices paid, December (50.3 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.

Read the latest financial and business news from Yahoo Finance

17.

Americans are less confident about where the US economy is headed

2024-12-23 16:28:15 by Josh Schafer from Yahoo Finance

US consumer confidence tumbled in December from the previous month amid Americans' growing uncertainty over the economic outlook in the year ahead.

The Conference Board's consumer confidence index declined by 8.1 points in December to 104.7, below the 113.2 expected by economists surveyed by Bloomberg.

The expectations index, which includes the short-term outlook for income, business, and labor market conditions, sank 12.6 points to 81.1 in December, its largest month-over-month decline since November 2020. That was just slightly higher than the threshold of 80 that usually signals a recession ahead.

Stocks hit session lows after the Conference's Board's release and then pared losses.

"Consumer views of current labor market conditions continued to improve, consistent with recent jobs and unemployment data, but their assessment of business conditions weakened," Conference Board chief economist Dana Peterson said in a press release. "Compared to last month, consumers in December were substantially less optimistic about future business conditions and incomes. Moreover, pessimism about future employment prospects returned after cautious optimism prevailed in October and November."

In December, 21.3% of respondents expected fewer jobs to be available in the next six months, up from 17.9% the month prior. Meanwhile, expectations for income decreases and worse business conditions in the next six months also moved higher.

The potential impact of President-elect Donald Trump's policies remained top of mind for consumers in December, per the Conference Board. Mentions of "politics" and "tariffs" both increased in December.

According to the data, "46% of US consumers expected tariffs to raise the cost of living while 21% expected tariffs to create more US jobs."

Also in Monday's release: The percent of consumers expecting higher stock prices in the next year fell to 52.9% from a record high of 57.2% seen in November.

The survey period ended on Dec. 16, meaning consumers submitted their responses prior to last Wednesday's Federal Reserve meeting. But the tone of the December survey from the Conference Board fell in line with uncertainty highlighted by Fed Chair Jerome Powell that rattled markets last week.

Markets sold off the day the meeting concluded when Powell explained why the central bank is expecting to cut interest rates at a slower pace than it had previously expected. Powell 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.

"It's kind of common-sense thinking that when the path is uncertain, you go a little bit slower [cutting interest rates]," Powell said. "It's not unlike driving on a foggy night or walking into a dark room full of furniture. You just slow down."

Mary Kelley, a supporter of US President-Elect Donald Trump carries a US flag as she and others wait to see the Trump motorcade drive by on his way to the airport from Mar-a-Lago, in West Palm Beach, Florida December 14, 2024. (Photo by ROBERTO SCHMIDT / AFP) (Photo by ROBERTO SCHMIDT/AFP via Getty Images)

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

18.

This Simple ETF Could Turn $1,000 a Month Into Over $213,000

2024-12-22 09:22:00 by Leo Sun, The Motley Fool from Motley Fool

Picking individual stocks can be rewarding for investors, but it can be a time-consuming and stressful affair. Investors should also ideally diversify their portfolios across a broad range of stocks to avoid putting all their eggs in a single basket.

For investors who don't have the time to buy individual stocks, exchange-traded funds (ETFs) are a simple way to build a diversified portfolio. ETFs hold baskets of stocks that track certain themes or trends, and they can be actively traded throughout the day. That sets them apart from mutual funds, which can only be traded once per day.

Smiling person pointing to a rising chart. — Image source: Getty Images.

Conservative investors might stick with an ETF like the Vanguard S&P 500 ETF (NYSEMKT: VOO), which passively tracks the S&P 500. However, more growth-oriented investors can invest in the Invesco QQQ Trust (NASDAQ: QQQ), which tracks the tech-heavy Nasdaq 100. Over the past 10 years, QQQ grew at a compound annual growth rate (CAGR) of 11.02% and beat the S&P 500's CAGR of 5.3%. Past performance doesn't guarantee future gains, but QQQ could potentially keep growing and turn monthly investments of $1,000 into more than $213,000 over the next 10 years.

What does the QQQ ETF actually own?

The QQQ ETF passively tracks the Nasdaq 100. Its top five holdings are currently Apple (9% of its assets), Microsoft (7.8%), Nvidia (7.6%), Broadcom (6.4%), and Amazon (5.5%). That makes it a great way to invest in the broader tech sector without being too heavily exposed to a single company.

Nearly 60% of QQQ's stocks are in the tech sector. Another 18% are in the consumer discretionary sector, 6% are in healthcare stocks, and the rest are spread across other sectors. Over the past 10 years, the QQQ ETF generated a total return of 437%. During the same period, the more broadly diversified S&P 500 only delivered a total return of 243%.

The QQQ ETF charges an expense ratio of 0.2%, which means $20 is automatically deducted from every $10,000 investment. That's much higher than the Vanguard S&P 500 ETF's expense ratio of 0.03%, but it's comparable to other ETFs that bundle together higher-growth stocks. So if you believe the Nasdaq 100 will continue to outperform the S&P 500, the QQQ ETF could be a stress-free way to stay ahead of the market.

How can QQQ turn monthly investments of $1,000 into $213,000?

There's no way to tell exactly where the Nasdaq 100 will head over the long term. But for this theoretical forecast, let's assume it continues to grow at a CAGR of 11% over the next 10 years. If you invest $1,000 in QQQ today and invest an additional $1,000 every month regardless of its trading price, your stake would grow to $213,430 in a decade.

You would have only contributed $121,000 through your monthly investments, but the magic of compounding would have generated $92,430 in additional gains. Using a disciplined dollar-cost averaging approach with scheduled $1,000 investments would also have let you buy more shares as the market swooned and fewer shares as the market rallied.

But assuming you have $121,000 in spare cash lying around, you could net an even bigger gain with a lump sum purchase. Assuming the QQQ grows at a CAGR of 11% over the next 10 years, your initial investment would grow to about $345,000.

That said, either approach could help you ride the Nasdaq 100's growth and beat the S&P 500 over the long term. The key is to stay patient, tune out all the near-term noise, and avoid cashing out too early if you don't need the money right away.

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*Stock Advisor returns as of December 16, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun has positions in Amazon and Apple. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, Nvidia, and Vanguard S&P 500 ETF. 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.

This Simple ETF Could Turn $1,000 a Month Into Over $213,000 was originally published by The Motley Fool

19.

The Fed's 'pivot' brought market uncertainty to the forefront

2024-12-19 18:14:56 by Josh Schafer from Yahoo Finance

Markets 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.

U.S. Federal Reserve Chair Jerome Powell speaks during a press conference where he announced the Fed had cut interest rates by a quarter point following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, U.S., December 18, 2024. REUTERS/Kevin Lamarque — Federal Reserve Chair Jerome Powell speaks during a press conference where he announced the Fed had cut interest rates by a quarter point following a two-day meeting of the Federal Open Market Committee on interest rate policy in Washington, Dec. 18, 2024. (REUTERS/Kevin Lamarque)

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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20.

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 Finance

This 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."

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

21.

Why the 'Magnificent 7' rally could be a 'defensive' move

2024-12-17 20:41:47 by Josh Schafer from Yahoo Finance

December’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.

SAN DIEGO, CALIFORNIA - DECEMBER 13: People shop at the Apple store at Fashion Valley, an upscale shopping mall on December 13, 2024 in San Diego, California. (Photo by Kevin Carter/Getty Images) — People shop at the Apple store at Fashion Valley, an upscale shopping mall, on Dec., 13, 2024, in San Diego, Calif. (Photo by Kevin Carter/Getty Images)

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

Read the latest financial and business news from Yahoo Finance

22.

Bitcoin Price Hits Fresh Record. How Fed Could Hamper Crypto.

2024-12-16 15:34:00 by Elsa Ohlen from Barrons.com

Bitcoin 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.

23.

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 Fool

When 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.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $822,755!*

See the 10 stocks »

*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. 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

24.

The final Fed meeting of 2024 awaits: What to know this week

2024-12-15 12:45:03 by Josh Schafer from Yahoo Finance

The 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.

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.

Federal Reserve chair Jerome Powell speaks at the DealBook Summit in New York, Wednesday, Dec. 4, 2024. (AP Photo/Seth Wenig)

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."

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.

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

25.

Annual Changes to the Nasdaq-100 Index®

2024-12-14 01:00:00 by Nasdaq, Inc. from GlobeNewswire

Nasdaq, Inc.

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

26.

2 Growth ETFs to Buy With $200 and Hold Forever

2024-12-13 10:25:00 by Geoffrey Seiler, The Motley Fool from Motley Fool

In 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.

Wall St. street sign. — Image source: Getty Images

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:

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!*

See the 10 stocks »

*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

27.

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:

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!*

See the 10 stocks »

*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

28.

Stocks will end 2025 lower due to sticky inflation, economic slowdown, Stifel predicts

2024-12-12 19:42:57 by Josh Schafer from Yahoo Finance

The 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."

Brown Bear, Ursus arctos horribilis, floating and fishing for salmon in the river, The calorie consumption would be much too high to capture live fish, What interests him are dead salmon, Although only half the nutritional value of live salmon. (Photo By: Education Images/Universal Images Group via Getty Images) — Brown Bear, Ursus arctos horribilis, floating and fishing for salmon in the river. (Education Images/Universal Images Group via Getty Images)

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

Read the latest financial and business news from Yahoo Finance

29.

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 Finance

One 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."

FILE PHOTO: A Wall Street sign hangs in front of a U.S. flag outside the New York Stock Exchange in New York City, U.S., September 18, 2024. REUTERS/Andrew Kelly/File Photo

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

Read the latest financial and business news from Yahoo Finance

30.

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 Finance

This 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

Read the latest financial and business news from Yahoo Finance

31.

Wall Street issues its most bullish 2025 S&P 500 target yet

2024-12-09 14:46:25 by Josh Schafer from Yahoo Finance

S&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."

The Charging Bull bronze sculpture, also known as Wall Street Bull or Bowling Green Bull in New York City with tourists around taking photos of it as it is a landmark, a tourist destination, a popular attraction and symbol for Wall Street and Financial District as well with aggressive financial optimism and prosperity, wealth and luck, located on Broadway at the Financial District of Manhattan. It was created by Arturo Di Modica in 1989. New York, USA on November 2019 (Photo by Nicolas Economou/NurPhoto via Getty Images) — The Charging Bull bronze sculpture, also known as Wall Street Bull or Bowling Green Bull, in New York City. (Photo by Nicolas Economou/NurPhoto via Getty Images)

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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32.

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 Finance

A 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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33.

Jobs Report Warmer than Expected: 227K; 4.2% Unemployment

2024-12-06 15:28:00 by Mark Vickery from Zacks

Friday, 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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34.

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 Finance

The 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.

A US flag is displayed on a construction worker's safety helmet during a topping out ceremony for the Midfield Satellite Concourse (MSC) Terminal Expansion project under construction at Los Angeles International Airport (LAX) in Los Angeles, California, on January 17, 2024. LAX, one of the busiest US airports, is undergoing major upgrades as part of a $30 billion capital improvement. (Photo by Patrick T. Fallon / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images) — A US flag is displayed on a construction worker's safety helmet at a project under construction at Los Angeles International Airport (LAX) in Los Angeles, Calif., on Jan. 17, 2024. (PATRICK T. FALLON/AFP via Getty Images)

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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35.

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 Fool

Investing 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.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $889,433!*

See the 10 stocks »

*Stock Advisor returns as of December 2, 2024

David Jagielski has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.

1 Unstoppable ETF Can Generate 10x Returns in the Long Run was originally published by The Motley Fool

36.

Jobless Claims Mixed, Trade Deficit Slimmer

2024-12-05 15:18:00 by Mark Vickery from Zacks

Thursday, 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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37.

Trump's Favorable Nominations That Leverage Bitcoin to Push Higher

2024-12-05 10:09:32 by ShantiPutri from GuruFocus.com

The 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.

38.

BlackRock sees 'exceptionalism' powering US stocks higher in 2025

2024-12-05 10:00:25 by Josh Schafer from Yahoo Finance

US 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.

NEW YORK, NY - JANUARY 16: Flags fly above the entrance of the BlackRock offices on January 16, 2014 in New York City. Blackrock posted a 22 percent increase in the most recent quarterly profits announcement. (Photo by Andrew Burton/Getty Images) — Flags fly above the entrance of the BlackRock offices on January 16, 2014, in New York City. (Andrew Burton/Getty Images)

"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.

Click here for in-depth analysis of the latest stock market news and events moving stock prices

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39.

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 Finance

Wall 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.

Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on October 23, 2022. The sculpture was created by Italian artist Arturo Di Modica in the wake of the 1987 Black Monday stock market crash. (Photo by Beata Zawrzel/NurPhoto via Getty Images) — Charging Bull bronze sculpture in the Financial District of Manhattan, New York, United States, on Oct. 23, 2022. (Photo by Beata Zawrzel/NurPhoto via Getty Images)

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

40.

South Korea Declares Martial Law and Ignites Geopolitical Tensions

2024-12-03 17:45:53 by ShantiPutri from GuruFocus.com

Geopolitical 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.

41.

SpaceX Valuation Soars: Tender Offer Could Value Company at $350 Billion

2024-12-03 13:05:14 by ShantiPutri from GuruFocus.com

SpaceX 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.

42.

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 Finance

The 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.

Bank of America has issued a 6,666 year-end target for the S&P 500 in 2025. (Photo by Michael M. Santiago/Getty Images)

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.

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

43.

Crucial jobs report kicks off December trading: What to know this week

2024-12-01 12:40:17 by Josh Schafer from Yahoo Finance

Stocks 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.

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44.

Wall Street sees 'slower' pace of Fed rate cuts in 2025

2024-11-29 10:00:30 by Josh Schafer from Yahoo Finance

Markets 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.

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.

WASHINGTON, DC - NOVEMBER 07: Federal Reserve Board Federal Reserve Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting in Washington on November 07, 2024 in Washington, DC. The Federal Reserve cut interest rates the second time this year, cutting its benchmark lending rate by a quarter percentage point as they extend efforts to keep the US economic expansion on solid footing amid concerns about a weakening labor market. (Photo by Kent Nishimura/Getty Images) — Federal Reserve Board Federal Reserve Chairman Jerome Powell speaks during a news conference following a Federal Open Market Committee meeting in Washington on Nov. 7, 2024, in Washington, D.C. (Kent Nishimura/Getty Images)

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.

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45.

Key Fed inflation gauge shows PCE 'going sideways'

2024-11-27 15:49:48 by Josh Schafer from Yahoo Finance

The 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."

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

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46.

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 Finance

This 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.

FILE PHOTO: A view shows a hat in support of Republican Donald Trump, after he won the U.S. presidential election, at the New York Stock Exchange (NYSE) in New York City, U.S., November 6, 2024. REUTERS/Andrew Kelly/File Photo — A view shows a hat in support of Republican Donald Trump after Trump won the US presidential election, at the New York Stock Exchange (NYSE) in New York City, on Nov. 6, 2024. REUTERS/Andrew Kelly/File Photo

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

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47.

Wall Street issues its most bullish S&P outlook yet for 2025

2024-11-25 21:47:15 by Josh Schafer from Yahoo Finance

Wall 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."

Charging Bull statue by Arturo Di Modica is seen in the Financial District of Manhattan, New York, United States of America, on July 4th, 2024.
(Photo by Beata Zawrzel/NurPhoto via Getty Images) — Charging Bull statue by Arturo Di Modica is seen in the Financial District of Manhattan, New York, United States of America, on July 4, 2024. (Beata Zawrzel/NurPhoto via Getty Images)

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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48.

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 Finance

Two 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.

NEW YORK, NEW YORK - NOVEMBER 21: The New York Stock Exchange is seen on November 21, 2024 in New York City. FBI agents arrested a Florida man in connection with an allegedly plotting to bomb the New York Stock Exchange. The Florida resident Harun Abdul-Malik Yener was charged with attempted use of an explosive to damage or destroy a building used in interstate commerce according to the court documents that were filed in the U.S. District Court Southern District of Florida. (Photo by Michael M. Santiago/Getty Images) — The New York Stock Exchange is seen on Nov. 21, 2024, in New York City. (Michael M. Santiago/Getty Images)

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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49.

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 Finance

Stocks 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.

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."

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.

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50.

Is This Outstanding Index ETF a Millionaire-Maker?

2024-11-23 11:08:00 by Jake Lerch, The Motley Fool from Motley Fool

There'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.

A paper bull charging across a wooden desk. — Image source: Getty Images.

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.

QQQ Total Return Level Chart — QQQ Total Return Level data by YCharts.

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.

Should you invest $1,000 in Invesco QQQ Trust right now?

Before you buy stock in Invesco QQQ Trust, consider this:

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $898,809!*

See the 10 stocks »

*Stock Advisor returns as of November 18, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Jake Lerch has positions in Amazon, Invesco QQQ Trust, The Trade Desk, and iShares Trust-iShares Russell 2000 ETF and has the following options: long December 2024 $615 calls on SPDR S&P 500 ETF Trust, short December 2024 $220 calls on iShares Trust-iShares Russell 2000 ETF, and short December 2024 $605 calls on SPDR S&P 500 ETF Trust. The Motley Fool has positions in and recommends Amazon, Apple, Microsoft, MongoDB, Starbucks, and The Trade Desk. The Motley Fool recommends Ansys, AstraZeneca Plc, and Kraft Heinz 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.

Is This Outstanding Index ETF a Millionaire-Maker? was originally published by The Motley Fool