The Dow and S&P 500 fell this week, but the Nasdaq advanced thanks to strong tech stocks. Broadcom’s valuation hit $1 trillion for the first time.
Stock Market Weekly Recap
On Friday, the U.S. stock market remained steady despite the superstitions surrounding Friday the 13th. Investors appeared to wait for the Federal Reserve’s policy decision on Wednesday.
The S&P 500 edged down 0.16 points, essentially unchanged, closing at 6,051.09. The index ended its three-week winning streak, falling 0.6% for the week.
The Dow Jones Industrial Average dipped 0.2% on Friday, shedding 86 points to close at 43,828.06. It experienced its seventh consecutive daily loss, the longest streak since 2020. The Dow recorded a 1.8% weekly loss, marking its second straight week of declines and its largest weekly loss since October.
The Nasdaq Composite gained 0.12%, adding 23.88 points to finish at 19,926.72. It ended the week up 0.3%, despite retreating from its record high of 20,061.65 reached earlier in the week.
Inflation, Fed Rate Outlook, and Treasury Yields
The Federal Reserve’s final policy meeting of the year concludes on Wednesday. Market data from the CME Fed Watch tool suggests a 97% chance of a 0.25% rate cut, lowering the federal funds rate to between 4.25% and 4.5%. However, future rate decisions remain uncertain as inflation data continue to cause concern.
Recent economic data revealed higher-than-expected inflation. Annual consumer inflation rose 2.7% in November, marking the largest increase since July. Core inflation, which excludes food and energy, remained at 3.3%. Both figures remain above the Fed’s 2% inflation target.
Wholesale price data indicated further inflationary pressure. Wholesale prices rose 3% year-over-year, while core wholesale prices, excluding food and energy, climbed 3.5%, the highest readings since February 2023.
Yields on U.S. government bonds increased for the fifth consecutive session, reaching their highest levels in weeks. On Friday, the benchmark 10-year Treasury yield surpassed 4.4%, while the 2-year yield reached 4.247%, reflecting persistent inflation concerns.
Big Tech Drives Nasdaq Gains
The largest technology stocks, including Apple, Nvidia, Microsoft, Amazon, Meta, Alphabet, Broadcom, and Tesla, remained strong despite inflation concerns. Several tech giants reached record highs this week.
Tesla’s stock soared to its first record close in over three years. Since the presidential election, Tesla’s share price has surged 65%, fueled by optimism surrounding CEO Elon Musk’s relationship with President-elect Donald Trump.
Broadcom’s valuation surpassed $1 trillion after its stock surged more than 24% on Friday. The increase followed the company’s forecast for stronger-than-expected first-quarter revenue and a bullish outlook on AI-related demand.
CEO Hock Tan projected that AI technology could generate $60 billion to $90 billion in revenue for Broadcom by 2027. This estimate suggests AI’s market potential for Broadcom could more than quadruple its current size.