S&P 500 and Nasdaq Reach New Record Highs

Investing.com reports that the S&P 500 and Nasdaq Composite achieved new record highs on Friday, buoyed by better-than-expected November jobs data, which likely won’t stop the Federal Reserve from cutting rates later this month.

The S&P 500 rose 0.25% to close at 6,090.27, while the Nasdaq climbed 0.81% to 19,859.77. Notable contributors included Tesla (TSLA), Meta Platforms (META), and Amazon (AMZN), leading both indexes to close at their peaks. In contrast, the Dow Jones Industrial Average fell by 123.19 points (0.28%) to finish at 44,642.52.

For the week, the S&P 500 and Nasdaq marked their third consecutive weekly gains of 0.96% and 3.34%, respectively, while the Dow decreased by 0.6%.

November's jobs report displayed an increase of 227,000 nonfarm payrolls, surpassing the Dow Jones forecast of 214,000, reflecting a rebound from October's revised 36,000. The unemployment rate rose to 4.2%, as anticipated.

Focus will shift to upcoming inflation data, with the November Consumer Price Index (CPI) and Producer Price Index (PPI) set for release on Wednesday and Thursday.

JPMorgan strategists estimate a 0.3% increase in the core CPI, indicating a significant data surprise would be needed to change their Federal Reserve policy outlook. They doubt Fed officials will want to create drama before the December meeting.

The PPI is expected to rise by 0.2% coinciding with last month’s rate. Energy prices are projected to increase 0.3% after three declines, while food prices are expected to rise by 0.2%.

Citi strategists predict that a softer core CPI should turn Fed and market focus away from inflation towards job softness. They anticipate a 25 basis point rate cut from the Fed next week, continuing cuts at future meetings with a terminal rate between 3.00%-3.25%.

Earnings Reports This Week

This week is significant for earnings, with updates expected from Adobe (ADBE), Broadcom Inc (AVGO), Toll Brothers (TOL), and Oracle (ORCL) among others. Broadcom, an AI player, has seen its stock soar 60% this year, thanks to robust growth in AI computing and networking, while VMware (acquired by Broadcom) aims for a $4 billion quarterly revenue run rate.

Analyst Insights on US Stocks

Oppenheimer

• Initiating S&P 500 price target for 2025 at 7100, 16.7% above last Friday's close. Companies across sectors could benefit from AI productivity improvements.

Citi

• Positive outlook for US equities into 2025. A target of 6500 for the S&P 500, anticipated mid-single-digit gains amid potential volatility.

BCA Research

• Predicts a mild and brief recession as a result of muted job creation and layoffs, leading to a bear market for the S&P 500.

UBS

• Market rally likely to continue given in-line inflation data and expected rate cuts, though caution urged due to potential corrections in Q1.

Evercore ISI

• While current valuations are high, optimism is prevalent and not irrational, with no signs yet of an end to the Bull Market despite lofty P/E ratios.