The S&P 500 is on pace for its best two-year gain since 1998. But investors aren't in the mood to party like it's 1999, as Prince famously sang.
Despite a 2% fall in December, the index is up 24% in 2024, heading into the final trading day of the year. After gaining 24% in 2023, it's on track for the best back-to-back percentage gain in a quarter of a century.
History offers a bittersweet guide for what happens next. The S&P 500 jumped 20% in 1999 before the dot-com bubble burst leading to three consecutive years of double digit declines.
Digging up the past isn't always helpful. But the disappointing end to the year does raise several questions. Most notably, how much of the recent selling is profit-taking vs genuine concern about the path ahead for stocks in 2025?
There are undoubtedly risks on the horizon, including the possible inflationary impact of President-elect Donald Trump's policies when he returns to the White House next month. The market already sees fewer rate cuts in 2025 than it did before the election, according to the CME FedWatch tool.
Therefore, whether Trump's tariffs threats are a negotiating tactic or not is another big question.
The strength of the Magnificent Seven is something else for investors to ponder. The group has made up 57% of the S&P 500's market cap gain this year, down from 65% in 2023, according to Dow Jones Market Data. The broader market needs its heavy hitters to perform again.
The good news is that a bad December doesn't necessarily mean a bad January or year ahead. In fact, on the last two occasions the S&P 500 has fallen in December -- 2018, and 2022 -- the index has jumped more than 6% in January and more than 20% the following year.
It could still be a happy new year for the market.
-- Callum Keown
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Trump's Backing of Foreign Worker Visas a Boost for Tech
President-elect Donald Trump has come out in praise of a foreign worker visa program -- despite criticizing it in the past -- and that bodes well for Amazon, Alphabet's Google, and Tesla, tech giants that are big sponsors of workers under the program. In doing so, Trump has sided with Tesla CEO Elon Musk.
-- Trump ignited a debate over so-called H-1B visas after naming Sriram
Krishnan as a senior advisor on artificial intelligence policy. Krishnan,
who came to the U.S. on a different visa that allows intracompany
transfers from foreign offices, has pushed to eliminate country green
card caps to "unlock skilled immigration."
-- Amazon.com was the top sponsor for foreign workers in fiscal 2024, along
other tech companies such as Infosys, Apple, and Meta Platforms,
according to Citizenship and Immigration Services data. Tesla had 742
approved H-1B petitions for initial employment this year -- more than
double the 328 approved in 2023.
-- Musk, a prominent Trump ally and co-head of Trump's government efficiency
effort, is among the most outspoken supporters of the skilled-worker
visas and has said he would go to war to defend them. Others in the GOP,
who are skeptical about immigration, have said the program takes jobs
away from Americans.
-- It's a reversal for Trump, who in June 2020 signed an executive order
during his first term barring foreign nationals from using certain
temporary employment-based visas through the end of the year, and
extending his green card ban. Courts later ruled that his
administration's actions were unlawful, forcing a settlement.
What's Next: The U.S. caps H-1B visas at 65,000 new visas each year, but another 20,000 can be granted to those with master's degrees or higher. If Trump's enthusiasm for the program holds, the top sponsors could have an even easier time recruiting foreign labor during his second administration.
-- Mackenzie Tatananni and Janet H. Cho
***
Super Micro Tops S&P 500's Most Volatile Stocks in 2024
Super Micro Computer was the S&P 500's most volatile stock in 2024, a year punctuated by a presidential election, the start of a Federal Reserve interest-rate-cutting cycle, and rising geopolitical tensions. The index itself is on track to close up more than 20% for a second consecutive year.
-- Shares of Super Micro swung from $119 in March to $18 in November as the
server maker confronted the threat of a Nasdaq delisting and the
departure of its outside auditor. That gave it a 7.6 volatility score,
said Dow Jones Market Data, nearly double others on the most-volatile
list.
-- Next on the most-volatile list were stocks of Globe Life, Palantir
Technologies, and Tesla. Palantir, one of Nasdaq's most expensive stocks
at almost 170 times forward earnings, soared nearly 350% in 2024, fueled
higher by blowout earnings in February and November.
-- Texas-based power-generating company Vistra Corp. has gained 264% this
year, benefiting from the artificial intelligence-fueled surge in
electricity demand. Chip makers Broadcom, Nvidia, AMD, and Intel were
also among S&P 500's 25 most volatile stocks in 2024.
-- Medical-device maker DexCom plunged 40% after its earnings report in June
and is down 37% this year. Pharmaceutical company Moderna has fallen 60%
this year despite its packed drug pipeline, including a combined vaccine
for flu and Covid-19.
What's Next: Tesla stock rose 68% this year on investors' hopes that CEO Elon Musk's ties to President-elect Donald Trump will benefit the electric-vehicle maker and on prospects for its coming robotaxi business. Tesla is expected to report fourth-quarter deliveries on Thursday.
-- Elsa Ohlen and Janet H. Cho
***
Treasury Says It Was Hacked By China-Backed Actor
The Treasury Department has told lawmakers that a China-backed actor hacked several of its employee workstations and accessed unspecified unclassified documents after stealing a key from a third-party software service provider.
-- The agency disclosed the breach in a letter to leaders of the Senate
Banking Committee, saying, "there is no evidence indicating the threat
actor has continued access to Treasury systems or information."
-- The third-party provider BeyondTrust notified Treasury that on Dec. 8 the
threat actor "gained access to a key used by the vendor to secure a
cloud-based service used to remotely provide technical support" for
Treasury Department offices, according to a letter seen by Barron's.
BeyondTrust could not immediately be reached for comment.
-- Treasury officials said they immediately contacted the Cybersecurity and
Infrastructure Security Agency (CISA) and worked with the Federal Bureau
of Investigation, the intelligence community, and third-party forensic
investigators to determine the scope of the incident.
-- "Based on available indicators, the incident has been attributed to a
China state-sponsored Advanced Persistent Threat $(APT)$ actor," the
Treasury told Senate committee leaders. Beijing denied it was behind the
attack, according to multiple reports Tuesday.
What's Next: Intrusions of this kind are considered "major cybersecurity incidents," according to Treasury policy, and the agency said it would share more details in a supplemental report to be made available in 30 days.
-- Janet Cho
***
Be sure to join this month's Barron's Daily virtual stock exchange challenge and show us your stuff.
Each month, we'll start a new challenge and invite newsletter readers -- you! -- to build a portfolio using virtual money and compete against the Barron's and MarketWatch community.
Everyone will start with the same amount and can trade as often or as little as they choose. We'll track the leaders and at the end of the challenge the winner whose portfolio has the most value will be announced in The Barron's Daily newsletter.
Are you ready to compete? Join the challenge and pick your stocks here.
***
-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Callum Keown
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 31, 2024 07:05 ET (12:05 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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