Stock Market Update Friday December 20, 2024

Stock Market Update Friday December 19, 2024 Stocks staged a strong rebound on Friday, with the S&P 500 and Nasdaq Composite each advancing approximately 1%, while the Dow Jones Industrial Average surged by 500 points. This recovery followed a volatile trading week in which the Dow experienced a sharp 1,100-point decline, marking its most prolonged losing streak since 1974.

The market's upward momentum was catalyzed by a surprising moderation in inflation data. The U.S. Department of Commerce reported a 2.4% year-over-year increase in November's Personal Consumption Expenditures (PCE) Price Index, a key inflation gauge closely monitored by the Federal Reserve. The figure came in below market consensus, easing investor anxiety over entrenched inflationary pressures.

Earlier in the week, concerns had mounted after the Federal Reserve signaled a more cautious stance on interest rate reductions, with fewer cuts than previously anticipated. However, Chicago Federal Reserve President Austan Goolsbee struck a more optimistic tone on Friday, suggesting the latest inflation print could leave room for rate cuts in 2024 despite the central bank's tempered outlook.

The market's relief rally underscores Wall Street's sensitivity to inflation-related data and Federal Reserve policy signals, as investors continue to recalibrate expectations for the trajectory of monetary policy and economic growth heading into the new year.

Away From Stocks: Treasurys saw modest gains, with 2- and 30-year yields each declining by two basis points to 4.3% and 4.72%, respectively. WTI crude remained just below $70 per barrel, while gold rose to $2,623 per ounce. Bitcoin stayed below $96,000, and the VIX closed the week around 18, nearly 10 points lower than Wednesday's peak but significantly higher than the sub-14 level from a week ago.