To The Moon

On Fri, 03 Jan 2025, US stocks rebounded in the nick of time, as investors neared the end of a holiday-shortened week that also rang in a new year.

Bringing with it expectations of (a) additional Fed interest cuts and (b) looser regulatory policies from the incoming administration.

A broad rally sent all 3 major US stock indexes to a higher close.

As expected, Mega cap stocks provided much of the muscles to prop up the indexes and in the process, put the tech-heavy Nasdaq out front.

When market closed for the week: (see above)

DJIA:

• Rose by +0.80% (+339.86 to 42,732.13).

S&P 500:

• Rose by +1.26% (+73.92 to 5,942.47).

• Best day in nearly 2 months and first gain since Christmas.

• Posted 2 new 52-week highs and 14 new lows.

Nasdaq:

• Rose by +1.77% (+340.88 to 19,621.68).

• Snapped a 5-session of declines, its longest since mid-April.

• Recorded 64 new highs and 30 new lows.

On NYSE, advancing issues outnumbered decliners by a 3.03-to-1 ratio, with 86 new highs & 89 new lows.

On Nasdaq, advancing issues outnumbered decliners by a 2.69-to-1 ratio, with 3,179 stocks rose and 1,181 fell.

Friday’s trading volume on US exchanges was 14.09 billion shares, compared with the 14.91 billion average for the full session over the last 20 trading days.

Looks like Christmas rally did take place after all, although a short-one & lightly traded.

Before we even begin to rejoice, hard fact is all 3 major indexes posted modest declines for the week and the S&P 500 logged its 3rd weekly loss in four (see below)

• DJIA: -0.95%.

• S&P 500: -1.38%.

• Nasdaq: -1.38%.

S&P 500 Sector Heatmap.

9 of 11 major sectors in the S&P 500 closed higher, with Consumer discretionary stocks (XLY) enjoying the largest percentage gain (+2.02%) after Thu, 02 Jan 2025's rout.

The other 2 sectors with healthy gains were:

• Technology (XLK) at +1.63%.

• Real estate (XLRE) at +1.37%.

Carson Group, Chief market strategist - Ryan Detrick has remarked:

• A multi-session selloff put a dour cap on a banner 2024 for US stock market.

• AI technology’s continual momentum and the US Fed's first interest rate cuts in 3½ years helped fuel double-digit gains in 2024.

• After the late-in-the-year weakness, and a very oversold market, buyers finally stepped in.

• The past week-and-a-half has been disappointing for the bulls, volume has been light and there hasn't been a lot of news.

Mon, 06 Jan 2025 will be the litmus test for a real bull-market, when Big money managers return to the desk, only then will traders (institution and retail) know if bullish trend can persist.

Anything else ?

(1) US Weekly Jobless claims.

US weekly jobless claims for week ending 28 Dec 2024 was published on Thu, 02 Jan 2025. (see above)

Weekly jobless claims fell by -9,000 to an 8-month low of 211,000 vs market expectations of 222,000 vs week before jobless numbers (220,000).

The 4-week moving average of claims, which strips out seasonal fluctuations from the data, fell -3,500 to 223,250.

All pointing to low layoffs at the end of 2024 and consistent with a healthy labour market.

The Labour Department’s Thursday reported added that recent upbeat economic data eg. Consumer spending reinforces the Fed’s projections for fewer interest cuts in 2025.

Labour market resilience is keeping US economic expansion on track.

This is good news at the start of a new year !

(2) ISM Purchasing Mgr Index (PMI).

The Institute for Supply Management's (ISM) purchasing managers' index (PMI) for December 2024 was released on Fri, 03 Jan 2025.

It was a surprised to the upside with a gain of +0.9 points to 49.3, its highest reading since March 2024, nudging ever closer to expansion territory.

*Note: Reading above 50 indicates expansion and below 50 contractions.

Week of 06 Jan 2025.

US Fed members will start their socializations from this week onwards.

All to be completed by 20 Jan 2025 when blackout starts, ahead of FOMC meeting on Jan 30-31 :

• 07 Jan 2025 - Richmond Fed President Tom Barkin will kickstart the socializing.

• Actually, he has already engaged the media on his views about interest cuts. (see above)

Jobs Reports Week.

This week will be about US jobs and unemployment reports, all over again.

Followings will be released over the week:

• Tue, 07 Jan 2025 - Jobs opening and Labour turnover surveys (JOLTs).

• Wed, 08 Jan 2025 - ADP employment (Private sector jobs report).

• Thu, 09 Jan 2025 - US weekly jobless claims.

• Fri, 10 Jan 2025 - US non-farm payroll (that includes US employment report).

What does this means ?

• US market could be jittery in the event that a weak set of jobs data is reported.

• Especially Friday’s jobs report that the Fed, Wall Street and investors will pour over, to get a sense of US economy’s overall performance, so far.

Mag 7 - 2025 Investment Best Bets ?

In yet another short trading (4 days) week, how will US market behave, in particular the Magnificent 7 ?

*Note : The NYSE will customarily close trading on Thu, 9 Jan 2025, in accordance with a National Day of Mourning to honour, the passing of former President Jimmy Carter.

The last such occasion was in December 2018 for the death of former President George W. Bush.

The magnificent seven has lived up to their name in 2024 with solid gains.

Their outsized market cap permitted the Mag 7 to hold a disproportionate influence on the market-cap weighted Nasdaq composite & S&P 500 indexes.

Returns from these 7 stocks in 2024 have been nothing but spectacular. (see below)

Top 3 stocks with best returns in 2024 were:

• Nvidia(NVDA)$

• $Meta Platforms, Inc.(META)$.

• Tesla Motors(TSLA)$.

As we get further into 2025, the question is whether the Mag 7 remains the best investment bet in 2025 ?

Especially this week with different types of jobs report released on a daily basis?

The two best performing stocks (#1 (Nvidia) & #3 (Tesla)) have been the most volatile of the lot since November 2024. (see above)

Both stocks are expected to thrive in 2025, for different perceived reasons:

(1) $NVIDIA(NVDA)$.

With the arrival of OpenAI’s ChatGPT, AI interest has dominated the Technology sector. Nvidia has been the main benefactor due to its lead role in providing the much sought after AI chip.

For 2025, Nvidia could outperform the other Mag 7 stocks again.

Based on CEO, Jensen Huang’s remarks, Nvidia is poised for a strong performance in 2025, driven by strong demand for its latest AI chip, the Blackwell.

After a temporary setback in Blackwell’s design flaw, it was reported that Nvidia has started delivery since December 2024; with both Meta Platform and $Microsoft(MSFT)$ - the early bird recipients.

Is the worse over for Nvidia ?

As of Fri, 03 Jan 2024, Nvidia's stock has traded above its 20-day, 50-day, and 200-day moving averages, indicating strong bullish momentum.

Last but not least, Nvidia's strategic partnerships and innovations in AI technology position the company well to capitalize on the growing AI market.

(2) $Tesla Motors(TSLA)$

Tesla remains a compelling investment for 2025, despite falling short in its 2024 annual EV deliveries. (see below)

Investors decided to ignore the shortfall on Friday as they were determined to rally the stock to close at a high of $410.44. (see below)

With its stock price perched way above its 20-day, 50-day and 200-day moving averages, it reflects investor “cult confidence” in its long-term growth prospects. (see above)

Tesla - the Electric Company?

Tesla's focus on expanding its energy storage business, with a record deployment of 31.5 GWh in 2024, more than doubling the previous record-breaking 14.7 GWh registered in 2023. (see below)

In just Q4 2024 alone, the EV maker said it deployed 11.0 GWh of energy storage products, compared with 3.2 GWh a year earlier, thus marking a +244% YoY surge.

Lastly, Tesla's CEO strategic ties with the incoming Trump administration could lead to favourable regulatory changes, boosting its autonomous vehicle ambitions.

• For better part of 2024, Tesla’s stock price hovered around the $200 - $250 banding.

• It trended “higher” when, its CEO started following Trump on the latter’s campaign trail.

• Stock price soared when Trump was declared the winner in the US presidential election and there was no looking back since.

Personally, I think $Alphabet(GOOG)$ is the “dark horse mag-7 stock” to own in 2025. Due to limited real estate, this will be a standalone post for another time?

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