U.S. Stock Markets Edge Toward Record Highs: What’s Driving the Latest Rally?
The major U.S. stock indices are inching higher on Friday as traders try to close out another session at or near record highs. The benchmark S&P 500 Cash Index is also closing in on a key milestone – 7000, nearly exactly 6 months from when it crossed over 6000, and never looked back the rest of the year.
At 16:02 GMT, the blue chip Dow is trading 48699.43, down 31.73 or -0.07%. The benchmark S&P 500 Index is trading 6937.38, up 5.33 or +0.08% and the tech-driven Nasdaq Composite is at 23639.045, up 25.738 or +0.11%.
S&P 500 Rally Patterns: Are Markets Repeating Their Previous Surge?
The current rally in the S&P 500 Index is eerily similar to the two previous moves. The first swing from October 10 to October 29 was 6550.78 to 6920.34 and the second swing was 6521.92 on November 21 to 6903.46 on December 11.
Respectively, the swings were 369.56 in 13 sessions and 381.54 in 13 sessions. If these patterns repeat then from the 6720.43 bottom on December 17, we could be looking at 7089.99 to 7101.97 by January 13.
Additional support is the 50-day moving average at 6790.29. This is also the short-term trend indicator.
Nasdaq Recovery Analysis: Can Tech Stocks Regain Their Momentum?
The Nasdaq Composite (IXIC) is making a similar swing move but from a different pattern. While the S&P 500 Index is showing higher-tops and higher-bottoms, the Nasdaq is trying to overcome a lower-bottom, lower-top chart pattern. This divergence reflects the rebalancing that took place in November and early December. At that time, traders dumped AI-related tech stocks and rolled into more conservative issues.
Dow Jones Price Forecast
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See all Dow Jones forecastsEssentially, traders moved from the tech-weighted Nasdaq and into the more balanced S&P 500.
But the current rally in the Nasdaq suggests a recovery is taking place. The index may not catch the S&P 500, but at least the pattern will shift to higher-top and higher-bottom January 2 to January 7 is the window of time for a rally into 24492.64 to 24518.92. A move into this area will also change the trend to up.
Like the benchmark, the market is also trading on the strong side of the 50-day moving average at 23208.33.
Market Sentiment Trends: What’s Fueling Investor Confidence?
Technically, the indexes are geared for new highs. Besides the technical picture, however, sentiment has also been supportive. It’s hard to measure the sentiment I’m talking about because it’s not a number. It’s the wherewithal to overcome the fear of an “AI Bubble”, increased tariffs, a government shutdown and persistent inflation.
Sector Movers Today: Which Industries Are Leading and Lagging?
In other news, the sector performance is mixed on Friday with only 3 out of 11 showing gains. The biggest winner is materials. The largest loser is consumer discretionary.
Top Gainers and Losers: Key Stock Performances to Watch
The biggest gainer in the S&P 500 Index is Freeport-McMoRan Inc. It’s up 3.015%. Target Corp is 1.989% higher. Nvidia jumped 1.718%.
On the downside, Moderna Inc and Texas Pacific Land Corp are both nearly 4.00% lower. Norwegian Cruise Line and Royal Caribbean Cruises are over 2.25% lower.
Year-End Outlook: Are New Highs Still Within Reach?
As we approach the end of the year, the trend is our friend with new highs on the horizon, although we could see some profit-taking and position-squaring as we head into the weekend.
More Information in our Economic Calendar.
