Weekly Market Update

Market Update

The US stock market had a volatile week, influenced by President Trump's pursuit of Greenland and its potential impact on trade relations with Europe. Despite this uncertainty, stocks managed to recover and even showed gains towards the end of the week.

Sector Performance

Industrials (XLI), Materials (XLB), Energy (XLE), and Consumer Staples (XLP) have outperformed the broader market, with all sectors up 5.5% or more over the past two weeks. The Russell 2000 (^RUT) index has risen 8% since the start of the year.

AI and Tech

Investor enthusiasm for artificial intelligence is expected to drive Big Tech stocks in particular this year, but Wall Street also expects gains in other sectors. However, concerns about AI's impact on software stocks have led to a decline in their prices.

Fed and Economy

The Federal Reserve's preferred inflation gauge, the PCE price index, showed that consumer prices rose at a 2.8% annual pace in November. The US economy grew at an annual pace of 4.4% for the third quarter, but unemployment benefits claims ticked up to 200,000.

Market Outlook

Experts are skeptical about President Trump's prediction of a massive market rally, with some warning that a doubling of the stock market would require a booming economy and potentially higher interest rates. The bond market has already bet on the Fed staying on hold for longer than expected.

Earnings and Economic Data

Next week will bring a busy earnings season, with companies like Intel (INTC), Netflix (NFLX), and Johnson & Johnson (JNJ) set to report their quarterly results. Investors are also bracing for interest rate decision by the Federal Reserve at its upcoming meeting.