13 Dec Market In Mixed Performance While Await Fed Rate Cut Decision On 18 Dec

Friday trading session ended with mixed performance as a post-election rally loses momentum, while investors await the Federal Reserve's decision on interest rates next week.

The S&P 500 closed fractionally lower, while the Dow fell 0.2% and the Nasdaq Composite added 0.12% Stocks were coming off a downturn on Thursday, when the market hit the pause button on a rally that has taken major indexes to a series of record highs.

The S&P 500 had a three-week winning streak snapped, while the Dow posted a decline for the second consecutive week. The Nasdaq, which surpassed 20,000 points for the first time on Wednesday but ended the week below that level, has gained ground in four straight weeks.

The major indexes all rose in early trading Friday as chip stocks surged after Broadcom (AVGO) reported better-than-expected earnings and projected significant AI-fueled sales growth in the coming years. Broadcom shares gained 24% today, a move that catapulted the chipmaker onto the small list of companies that have a market capitalization of more than $1 trillion.

Among other chip stocks, Marvell Technology (MRVL) rose 11% while Arm Holdings (ARM) and Micron Technology (MU) each advanced about 4%. The iShares Semiconductor ETF (SOXX) rose nearly 3%.

Friday (13 Dec) Economic Data Recap

November Export Prices remains unchanged while previous was revised to 1.0% from 0.8%. November Export Prices ex-agriculture was up 0.1% while previous was revised to 0.8% from 0.6%.

November Import Prices was up by 0.1% while previous was revised to 0.1% from 0.3%. November Import Prices ex-oil remained unchanged with previous at 0.2%.

The economic data calendar was light on Friday ahead of next week's highly anticipated Federal Reserve policy meeting. Key inflation indicators released this week have shown that price pressures persist, but market participants still fully expect that the Fed will cut its benchmark rate on Wednesday.

Economic Data Expected On Monday (16 Dec)

We are expecting the following economic data on Monday (16 Dec) :

December Empire State Manufacturing Survey with previous at 31.2 is expected to be released at 8:30 ET, followed by flash December S&P Global U.S. Manufacturing PMI where the previous was recorded at 49.7 and flash December S&P Global U.S. Services PMI with previous recorded at 56.1 at 9:45 ET.

Note Yield Rose AS Broader Equity Market Gains Settled Limited

Rising market rates limited broader equity market gains. The 10-year yield increased eight basis points to 4.40%, before settling at 4.396%.

The 2-year yield rose five basis points to 4.24%, before closing at 4.247%, ahead of next week's expected rate cut. Compared to last Friday, the 10-year yield is up 25 basis points, and the 2-year yield is up 14 basis points.

This yield movement followed disappointing inflation data, including weaker-than-expected November CPI and PPI reports, and indications of a softening labor market.

S&P 500 Technology and Consumer Discretionary Sector Ended In The Green

S&P 500 Technology sector increase of +0.54% was catalysed by gains from Broadcom which gained 24.43%, Micron and Palantir also contributed with 4.34% and 3.93% respectively.

In the semiconductor sector, despite a generally sluggish session, some key players like NVIDIA (NVDA) saw reversals. NVIDIA initially gained 1.6% but closed down 2.8% at $134.25. Nonetheless, the PHLX Semiconductor Index (SOX) still posted a 3.4% gain.

Consumer Discretionary sector also gained 0.42%m thanks to the continued from $Tesla Motors(TSLA)$ which managed to gain another 4.34%.

Stocks To Watch

$Alphabet(GOOGL)$ and $Microsoft(MSFT)$ might soon be designated as global gatekeepers for artificial intelligence technology by the U.S. Department of Commerce. This initiative would allow these cloud providers to offer high-end AI chips to global clients while restricting access to certain countries. This move is part of the "Artificial Intelligence Diffusion" rule, which is currently under review and could be published soon. $NVIDIA(NVDA)$ and AMD (AMD) are also mentioned as companies that may compete for licenses to import limited AI chips.

Though we saw GOOGL trade with a recent decline slightly from its highs, it is still showing very strong upside potential, still trading short-term and long-term MA, with MACD giving strong upside movement.

MTF is giving very convincing strong upward trend and we should be seeing GOOGL continued to move upside.

Super Micro Computer (SMCI) is reportedly engaging with Evercore to raise capital through a potential private investment in public equity. The company is exploring interest from private equity firms and has been granted an extension by Nasdaq to file its required reports, maintaining its listing on the stock exchange until February 2025.

Quantum computing stocks, including Rigetti Computing (RGTI), D-Wave Quantum (QBTS), Quantum Computing (QUBT), and IONQ (IONQ), saw significant gains following Google's announcement of its new quantum chip, Willow. This development has spurred increased interest in these stocks, with Rigetti leading the charge with a 13% rise.

Tesla (TSLA) shares reached a new high amid reports that the Trump transition team plans to eliminate a requirement for automakers to report crashes involving self-driving systems. Tesla has reported the most crashes under this mandate, which has been criticized by the Alliance for Automotive Innovation, representing major automakers like General Motors (GM) and Toyota (TM).

$Broadcom(AVGO)$ experienced a significant surge, with shares rising 19% after announcing a revenue target of $90 billion from custom AI chips by 2027. This optimistic guidance also boosted other semiconductor stocks, including Marvell Technology (MRVL), Nvidia (NVDA), and AMD (AMD).

Sycamore Partners is reportedly preparing a $10 billion takeover bid for Walgreens Boots (WBA), which saw a 3.6% rise. The private equity firm is coordinating with major banks for debt funding, and the deal could involve selling parts of Walgreens' business, such as the Boots UK chain.

Summary

Investors are waiting to see what would come out from the last FOMC meeting on 18 Dec for 2024, and we are seeing semiconductor sector getting some attention with the strong earnings showing from Broadcom (AVGO), but will this trend continue into 2025?

The Federal Reserve is widely expected to cut its key interest rate on Wednesday, but plans for future cuts are much more up in the air. Fed officials could give some insight into how the central bank is digesting recent economic data showing stubborn inflation and a resilient but still-cooling labor market.

Expectations for more rate cuts next year have diminished, and incoming president Donald Trump's tariffs are an economic wildcard that could affect the Fed's monetary policy.

Appreciate if you could share your thoughts in the comment section whether you think market would continue to trade in a mixed performance mode this year before the FOMC meeting on 18 Dec.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.