Wall Street posted a three week win streak on Friday, propelled by strengthened expectations for another interest rate cut by the Federal Reserve at its final monetary policy committee meeting of the year later this month. This week was marked by a big milestone: the S&P 500 surged past 6,100 points in a historic first, and the index has now smashed past the year end targets of most of the brokerages on the Street.
In terms of the economic calendar, the major data point this week was the U.S. nonfarm payrolls report for November. Coming off the heels of a particularly weak October report, job growth bounced back last month with additions of 227K – a figure that comfortably beat the consensus. Additionally, the unemployment rate ticked up to 4.2% from 4.1%. The reading showed that the labor market was continuing to remain resilient, and it set up the Fed for another rate cut. For the week, the S&P climbed 1.0%, while the Nasdaq Composite added 3.3%. The Dow slipped 0.6%.
Is it all too good to be true? On Wall Street, if you have to ask that question, you probably already know.
Future Wealth’s View
Caution and a risk filled 2025 notwithstanding, the bulls raged on Friday after data showing the continued strength of the labor market. The University of Michigan consumer sentiment for the US increased for a fifth consecutive month to 74 in December 2024, the highest level since April, compared to 71.8 in November and above forecasts of 73. The Index of Consumer Expectations focuses on three areas: how consumers view prospects for their own financial situation, how they view prospects for the general economy over the near term, and their view of prospects for the economy over the long term.
A positive reading of consumer confidence coupled with a strong jobs report leads us to believe that we are set for a strong close for 2024. It is quite amazing that we will have had back to back years of 20%+ returns in the S&P 500 amidst all the global turmoil.
The sage, Warren Buffett is right once again – “Never Bet Against America”.