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The stock market had a rollercoaster week but could be riding bullish momentum into yearend.
The S&P 500 slid 2 percent between Friday, December 13 and Friday, December 20. It was the index’s second straight negative week, with prices rebounding from a drop of 3.6 percent at the low. There was a selloff on Wednesday, but stocks held their ground the next session and rebounded Friday.
The S&P also bounced around 5,860, matching October’s peak and the low in mid-November. Retesting and holding that level may suggest that old resistance has become new support — potential confirmation that 2024’s strong uptrend remains intact.
| Lamb Weston (LW) | -22% |
| Amentum (AMTM) | -17% |
| Vertex Pharmaceuticals (VRTX) | -14% |
| Super Micro Computers (SMCI) | -13% |
| Micron Technologies (MU) | -12% |
| Source: TradeStation Data |
The Federal Reserve caused the drop by forecasting fewer interest rate cuts next year. (Only 50 basis points are expected, compared with 100 basis points projected in September.) The central bank also raised estimates for inflation and lowered its unemployment number. Those hawkish moves lifted Treasury yields and the U.S. dollar. It also triggered one of the fastest volatility spikes in history.
But other news wasn’t as frightening. The personal consumption expenditures (PCE) inflation report rose less than feared and third-quarter gross domestic product was revised sharply higher. Jobless claims also fell more than expected and leading economic indicators surprised to the upside.
Every major sector fell last week, along with 87 percent of the S&P 500’s members.
Energy stocks dropped the most amid ongoing worries about higher oil supplies and slower demand. Weak Chinese retail-sales data aggravated those fears.
Apple (AAPL), daily chart, with select patterns and indicators.
Real-estate companies and homebuilders also crashed thanks to the Fed’s guidance on keeping interest rates high. Materials plunged as well.
Last week saw the Dow Jones Industrial Average complete a 10-day losing streak, its longest negative run in decades. The benchmark nosedived as cyclical stocks like financials and industrials shed post-election gains. Health-care names have also struggled as investors worry about increased political risk.
| Darden Restaurants (DRI) | +13% |
| Match (MTCH) | +7.3% |
| Jabil (JBL) | +7.3% |
| Palantir Technologies (PLTR) | +5.4% |
| 21st Century Fox (FOXA) | +5.2% |
| Source: TradeStation Data |
Darden Restaurants (DRI) jumped to a record high after earnings and revenue beat estimates. It was the only member of the S&P 500 with a double-digit gain last week. Jabil (JBL) also climbed on strong quarterly results.
Lamb Weston (LW) dropped after earnings and revenue missed. Micron Technologies (MU) slid on weak guidance. Vertex Pharmaceuticals (VRTX) had its worst week in four years after a clinical trial raised doubts about a pipeline drug for back pain.
Apple (AAPL) also seemed impervious to the volatility, advancing for the fifth straight week and closing at another record high. At least two headlines suggested the iPhone giant made incremental progress with AI. Reuters reported AAPL’s working to integrate the AI models of China’s Tencent and ByteDance. OpenAI also said it plans to make ChatGPT function as an agent with desktop apps.
The S&P 500 enjoyed a period of calm between the start of December and last Wednesday. (The index fluctuated less than 1.5 percent during those 12 sessions.) The Fed’s interest-rate announcement on December 18 hammered prices by 2.9 percent, their second-biggest drop since the bear market ended in October 2022.
The ensuing selloff blew apart the tight range and produced a bearish outside candle. Two sessions later, prices opened at their lowest level since the election and reversed higher. That produced a bullish outside day. Prices also held their 50-day moving average.
S&P 500, daily chart, with select patterns and indicators.
Last week additionally saw the most new 52-week lows in the S&P 500 and the fewer companies above their 50-day moving averages since November 2023. Those extremes for breadth could potentially suggest that selling pressures have peaked.
The S&P 500 is up 24 percent so far in 2024, similar to its gain in 2023. Without a major reversal in the next six sessions, it could enjoy its first consecutive years with gains of at least 20 percent since the late 1990s.
This week is cut short by Christmas on Wednesday, with an early close on Tuesday.
There are no important earnings.
Durable-goods orders and new home sales are tomorrow morning. Trading stops at 1 p.m. ET.
Initial jobless claims and crude-oil inventories are on Thursday.
Downloads are available here. TradeStation’s ideas on TradingView are available here. Check out our next “State of the Market,” on Monday, 1/16. Sizing Up the S&P 500 S&P 500 falls the most since 8/5, hits low of month Prices under 8-, 21-day EMAs, 50-day MA...
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