WEEKLY MARKET RECAP – DECEMBER 13, 2024

The S&P 500 edged down slightly, breaking a three-week winning streak, while the Dow fell nearly 2%. The NASDAQ posted modest gains, supported by relatively strong performance in communication services sector stocks, which helped it outperform other major indices.

For the second consecutive month, the Consumer Price Index (CPI) showed a slight increase compared to the prior month. November’s annual rate of 2.7% exceeded October’s 2.6% and September’s 2.4%. Although this latest reading met expectations, it highlighted ongoing challenges in reducing inflation to the Federal Reserve’s long-term target of 2.0%.

Amid persistent inflation concerns, U.S. government bond yields surged after a brief period of declines. The 10-year Treasury note yield rose to approximately 4.40% on Friday, up from 4.15% the previous week and significantly higher than its September 16 low of 3.62%.

With just over two trading weeks remaining in 2024, the S&P 500 appeared poised to achieve consecutive annual gains exceeding 20% for the first time since 1999. As of Friday, the index had delivered a year-to-date total return of nearly 29%, following a return of over 26% in 2023.

On Thursday, the European Central Bank (ECB) reduced its benchmark interest rate for the fourth time this year, implementing a quarter-point cut following the Swiss National Bank’s larger-than-expected half-point reduction. The ECB also lowered its economic growth forecasts, predicting GDP growth of 0.7% in 2024 and 1.1% in 2025.

U.S. large-cap growth stocks significantly outperformed their value counterparts for the second consecutive week. By Friday’s close, the growth index had risen approximately 3.9% over the two-week period, while the value index declined by the same margin.

S&P 500 companies increased stock buyback spending to $918 billion in the 12 months ending September 2024, marking a nearly 17% year-over-year rise, according to S&P Dow Jones Indices. However, third-quarter buyback spending was 4% lower compared to the first quarter of this year.

At its upcoming two-day meeting concluding Wednesday, the Federal Reserve is widely expected to approve another 0.25% interest rate cut. This follows a 0.5% rate reduction in mid-September and another 0.25% cut in early November.