U.S. Markets in Focus: Holiday Trends and Economic Resilience

As December begins, the U.S. equity markets remain a key source of optimism amidst a globally complex economic environment. Here’s what you need to know this week:
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Weekly - December 2nd, 2024

U.S. Equities: A Season of Opportunity

  • Economic Growth: The U.S. economy continues to outshine global peers, with the composite PMI reaching a 31-month high at 55.3 in November, signaling robust business activity.

  • Inflation Dynamics: Inflation remains a factor to watch. While energy prices eased by 4.9%, electricity costs climbed by 4.5%, contributing to a mixed inflation picture. Core inflation remains steady at 3.3%.

  • Stock Market Highlights:

    • Retail Sector Boom: Retailers like Gap Inc. and Ross Stores have seen double-digit growth in share prices after strong earnings, reflecting robust consumer spending.

    • Housing Sector Resilience: Stabilizing mortgage rates have renewed interest in the housing market. Companies like D.R. Horton reported solid performance, suggesting opportunities in this sector.

    • Tech Sector Dominance: The "Magnificent Seven" stocks (Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Tesla, and Nvidia) continue to drive U.S. market performance. Nvidia has surged nearly 195% YTD, driven by its leadership in AI chip technology.

    • Small-Cap Surge: The Russell 2000 index rose by 4.5% last week, showcasing investor confidence across a diverse set of growth-oriented stocks.

Rest of the World: Challenges and Opportunities

  • Brazil: Black Friday marked a record-breaking day for digital transactions, with Brazil’s Pix system seeing a 120.7% increase in transaction value compared to last year, totaling over $21 billion. While this underscores the country’s digital transformation, the equity market faces headwinds due to potential Chinese economic slowdown and rising domestic interest rates.

  • Mexico: JPMorgan upgraded Mexican equities to "overweight," driven by strong U.S. growth and remittance flows bolstered by a weaker peso. However, potential trade tensions with the U.S., including tariff threats, could create uncertainties for cross-border economic dynamics.

  • Global Emerging Markets: A strong dollar and rising U.S. Treasury yields have contributed to capital outflows from emerging markets, with China’s underperformance weighing on the MSCI Emerging Markets Index.

What to Watch in December

As the holiday shopping season gains momentum, sectors such as e-commerce, consumer discretionary, and logistics are expected to perform well. With Black Friday and Cyber Monday projected to generate record-breaking $75 billion in revenue, retail equities are positioned for growth.

However, investors should remain vigilant of potential headwinds, including persistent inflationary pressures and the Federal Reserve's evolving monetary policy.

Vest’s Take: Capitalizing on U.S. Market Strength

This holiday season presents unique opportunities for investors focused on U.S. equities. Key sectors, including retail, technology, and housing, offer promising prospects driven by consumer spending trends and economic resilience.

Stay Ahead with Vest Stay tuned for more insights into the U.S. equity markets and how to leverage them for your portfolio. As always, Vest is here to empower your financial journey with curated opportunities and expert tools.

Wishing you a joyful holiday season and prosperous investments ahead. Let’s make December count with Vest!

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V.02 11/17/2023