S&P 500 Steadily Coasts to New Record High

The prospect of more rate cuts once again boosted the S&P 500 (Index: SPX). The index closed out the trading week ending Friday, 6 December 2024 nearly a full percent higher than it did the previous week at 6,090.27. That’s a new record high close for the S&P 500.

Although several Federal Reserve officials signaled they want to go slower with rate cuts in 2025, the CME Group’s FedWatch Tool is now projecting that after the Fed acts to reduce the Federal Funds Rate by 0.25% on 18 December 2024, it will continue quarter point rate cuts at 12-week intervals into mid-2025, adding one more rate cuts than expected a week earlier. After that, the FedWatch tool anticipates the pace of rate cuts will slow, with just one more on 10 December (2025-Q4).

For the latest update of the dividend futures-based model‘s alternative futures chart, we find investors are focusing on 2025-Q2 as they set current day stock prices.

That’s a change from the preceding week, in which we saw investors focusing on 2025-Q3. However, the change in the forward-looking focus of investors is consistent with the new expectation the Fed will cut rates during 2025-Q2, which wasn’t in the picture a week earlier.

Meanwhile, investors absorbed other information during the week that was. Here are the week’s market moving headlines:

Monday, 2 December 2024

• Signs and portents for the U.S. economy:

• Oil rises on upbeat China data, shaky Israel-Lebanon ceasefire
• US manufacturing contraction slows in November, outlook uncertain
• From Boeing to Intel: CEO exits at major global companies in 2024

Fed minions not making monetary policy very exciting, start laying the ground for more rate cuts:

• Fed’s Powell may have made US monetary policy boring again
• Fed’s Williams eyes further cuts as price pressures cool further
• Fed’s Bostic: Base case remains for inflation to continue falling

Bigger trouble, stimulus developing in China:

• Exclusive: Latest US strike on China’s chips hits semiconductor toolmakers
• China’s Nov factory activity growth hits 5-month high, Caixin PMI shows

Bigger trouble developing in Eurozone:

• Europe’s embattled auto sector plans plant closures and layoffs

• Euro zone Nov factory activity fell sharply; outlook gloomy, PMI shows

German manufacturing sector mired in downturn in November, PMI shows

ECB minions say they’re focusing on the future:

• ECB’s Lane says bank should focus on future risks for policy decisions, FT reports

Nasdaq, S&P, and Dow finished mixed as Treasury yield inversion talks resumed

• Yield curve inversion talks return with the US2Y and US10Y both at 4.20%
• S&P 500, Nasdaq finish higher with tech-related shares

Tuesday, 3 December 2024

• Signs and portents for the U.S. economy:

• US labor market steadily cooling amid higher job openings, low layoffs
• China bans export of critical minerals to US as trade tensions escalate

• Explainer: After China’s mineral export ban, how else could it respond to U.S. chip curbs?

Oil rises on fears about Lebanon, further OPEC+ supply cuts

• OPEC oil output rises in November as Libya recovers, survey finds

Fed minions say they’d like to cut Federal Funds Rate later this month:

• Fed policymakers signal open mind on rate cut this month

• Fed hawks and doves: what US central bankers are saying

Other central banks cutting interest rates:

• Central banks extend easing cycle in November as uncertain 2025 looms

ECB minions worrying about potential U.S. tariffs in 2025, thinking about cutting rates before 2024 is over:

• Trump tariffs could weigh on European growth and inflation, ECB’s Cipollone says
• ECB rate cut of 25 bps possible, not more, ECB’s Holzmann tells paper

Nasdaq, S&P waver after hitting record highs; traders bump up odds of December rate cut

• Nasdaq, S&P 500 inch higher as investors digest Fed officials’ comments

Wednesday, 4 December 2024

• Signs and portents for the U.S. economy:

• Oil edges higher on imminent OPEC+ decision and geopolitical turmoil
• US economy grew slightly in recent weeks, Fed survey says

• US factory orders rise marginally in October
• US services sector activity takes breather in November

Fed Chair Powell Says Economy Looks Better Now Than in September

• Powell says Fed can afford to be a little more cautious
• Fed’s Musalem expects more rate cuts, keeping options open on December meeting

Bigger trouble developing in China:

• China can accept GDP growth of less than 5%, says People’s Daily
• China’s services activity expansion eases in Nov, Caixin PMI shows

Bigger trouble developing in Eurozone, ECB minions thinking about rate cuts:

• Euro zone business activity declines sharply in November, PMI shows
• ECB’s Rehn says grounds for rate cut in Dec have increased, daily HS reports

Dow ends above 45,000, Nasdaq, S&P finish at new highs powered by tech rally

• Tech rally, Powell comments boost indexes to record closing highs
• Bitcoin tops $100,000, stocks party at record highs

• From zero to $100K: Bitcoin’s evolution in milestones

Thursday, 5 December 2024

• Signs and portents for the U.S. economy:

• OPEC+ delays oil output hike until April, extends cuts into 2026

• OPEC+ output cuts turned US into top energy exporter, Rosneft’s Sechin says

Oilfield service consolidation to increase under Trump, report says

US trade deficit shrinks on decline in imports

Bigger trouble developing in Eurozone:

• European companies cut jobs as economy sputters

Dow, Nasdaq, S&P end lower ahead of November jobs report; bitcoin falls below $100K

Friday, 6 December 2024

• Signs and portents for the U.S. economy:

• Oil prices edge down as extended OPEC+ supply cuts highlight weak demand
• US job growth rebounds in November; unemployment rate ticks up

Fed minions expected to deliver quarter point rate cut in December 2024, signal they want more time in between rate cuts in 2025 as Bidenflation persists:

• Fed seen cutting rates this month as debate shifts to 2025
• Fed’s Goolsbee hopes neutral can be in sight by late next year
• Fed’s Hammack says time to slow rate cuts may have arrived
• Fed’s Bowman, worried by inflation, calls for caution on rate cuts

Bigger trouble, stimulus developing in Canada:

• Canada’s 6.8% jobless rate boosts bets for 50-point interest rate cut

BOJ minions try to create mystery about what they’ll do:

• BOJ is holding cards close to its chest on December rate hike

• Dovish BOJ board member says rate decision will be ‘data dependent’

Japan Oct wages show 32-year-high base pay growth, positive for BOJ hike

ECB minions getting excited to cut Eurozone interest rates, as bigger trouble develops for Eurozone economy:

• Key quotes from ECB policymakers ahead of likely rate cut on Dec 12
• Gas price shock set to add to Europe’s industrial pain
• Euro zone productivity growth remains weak in Q3, data shows

S&P, Nasdaq end at record highs with rate-cut bets lifted after payrolls print; Dow falls

• S&P 500, Nasdaq rise with consumer discretionary shares, rate cut bets

The Atlanta Fed’s GDPNow tool‘s projection of the real GDP growth rate for the current quarter of 2024-Q3 bounced up to +3.3% from the previous week’s +2.7%.

Image Credit: Microsoft Copilot Designer. Prompt: “An editorial cartoon with a Wall Street bull who is happy because the S&P 500 is at a record high”.