Stock Market Wrap-Up: Dow, FED, and Big Tech in Focus

Dec 17, 2024

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The stock market faced another tough session, with the Dow Jones continuing its historic losing streak. It slid for the eighth day, marking its longest decline since 1978. Investors are watching nervously as key stocks, like UnitedHealth and Goldman Sachs, pulled the index lower. Even Nvidia couldn’t dodge the downward pressure, losing around 2%. The Nasdaq, which hit record highs earlier, also fell slightly.

All eyes remain on the Federal Reserve’s upcoming rate cut decision. Markets are almost certain a 0.25% rate cut is coming, but the real question is what happens next. With inflation still hanging around and labor data cooling, the FED has a tightrope to walk. Everyone’s wondering: Will this be the last cut for a while, or is more relief coming?

Nvidia and Big Tech Under Pressure

Big Tech, especially Nvidia, is feeling the heat. After reaching record highs just a month ago, Nvidia stock has tumbled over 10%. Investors are worried that AI spending might slow down. Microsoft and Google hinted at pumping the brakes on their massive AI investments. Plus, competition is rising, with Amazon building its own AI chips and Broadcom making big deals in the space.

Nvidia, which replaced Intel in the Dow Jones earlier this year, has a lot riding on its AI dominance. Even though it’s still a market leader, fears of production delays and antitrust investigations in China aren’t helping. While analysts like Dan Ives remain bullish, predicting Nvidia’s market cap could reach $4 trillion in 2025, near-term challenges have the stock market spooked.

FED Rate Cut Decision Steals the Spotlight

The FED’s big rate cut decision is almost here, and everyone is watching closely. Mark Cabana from Bank of America the FED will deliver the widely expected 25 basis point cut. He says the central bank doesn’t want to upset the stock market, especially as inflation remains sticky and labor markets show signs of slowing down.

A rate cut could boost equities, as lower borrowing costs often increase investor appetite for risk. It’s not just stocks; crypto markets are also buzzing. Bitcoin briefly surged past $108,000, driven by optimism that FED cuts will bring more liquidity. Still, some analysts believe this could be the last cut for a while. The FED may pause in January, waiting for clearer economic signals before making any further moves.

Retail Sales and Stock Market Optimism

The U.S. economy showed surprising strength in November, with retail sales rising faster than expected. Consumers, it seems, are still spending big, especially during the holiday season. This strong data gave the stock market mixed signals. On one hand, it’s good news for the economy. On the other, it complicates the FED’s job. Stronger economic data could give the central bank a reason to slow down future rate cuts.

Tesla, however, managed to buck the overall market gloom. It received another upgrade from analysts, sending its stock to a fresh all-time high. Investors see Tesla as a winner no matter what happens with rates, thanks to its leadership in electric vehicles and growing market share.

What’s Next for the Stock Market?

The stock market is on edge as the FED prepares to wrap up its final meeting of the year. A rate cut seems almost certain, but what happens next will drive stocks into 2024. Analysts are split: Will the FED continue cutting rates to support growth, or will it pause to keep inflation in check?

Stocks like Nvidia and Tesla will remain under the microscope as investors search for direction. Meanwhile, the Dow Jones will try to break its losing streak and find solid footing. Big Tech’s AI dominance and the FED’s next moves will shape the stock market’s path in the weeks to come. Buckle up—it’s going to be an interesting ride!

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