Wall Street Celebrates “Red Sweep” with Best Month of 2024

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Wall Street Celebrates “Red Sweep” with Best Month of 2024

The U.S. stock market has roared to life in November, posting its most robust monthly performance of 2024. This surge comes on the heels of a Republican “Red Sweep” in the November 5th elections, with President-elect Donald Trump set to return to the White House and Republicans retaking control of both chambers of Congress.

Market Performance

The S&P 500 climbed 0.56% to close at a new record high of 6,032.38, while the Dow Jones Industrial Average jumped 188.59 points, or 0.42%, to end at 44,910.65. Both indices notched new intraday and closing highs. The tech-heavy Nasdaq Composite also joined the rally, advancing 0.83% to 19,218.17.

For November:

  • The Dow surged 7.5%
  • The S&P 500 gained 5.7%
  • The Nasdaq Composite rose more than 6%

These impressive gains mark the best monthly performance for the Dow and S&P 500 in 2024.

Driving Factors

Several factors have contributed to this market optimism:

  1. Trump’s “America First” Agenda: Investors are bullish on Trump’s tax cuts and deregulation promises.
  2. Interest Rate Expectations: The market anticipates potential interest rate cuts, with CMEGroup’s FedWatch Tool showing a 66% likelihood of a 25 basis point reduction at the next Federal Reserve meeting.
  3. Sector Performance: Small-cap stocks, financials, and technology have significantly increased. The Russell 2000, which focuses on smaller companies, surged 10.8% in November.
  4. Chip Stocks: Semiconductor companies rallied after reports of potentially less stringent restrictions on chip sales to China.

Notable Performers

  • Palantir: The AI and data analytics company was the S&P 500’s top performer in November, gaining over 60%.
  • Tesla: The electric vehicle maker’s stock rose more than 38% for the month, benefiting from CEO Elon Musk’s support of Trump.
  • Walt Disney Co: The entertainment giant led the Dow with a 22.1% gain in November.

Global Market Impact

While U.S. markets celebrated, global reactions were mixed:

  • European markets saw gains, with the STOXX 600 index posting its first monthly increase since May.
  • Asian markets were more subdued, with Tokyo’s Nikkei 225 falling 0.4% on inflation concerns.
  • Chinese markets advanced, with Hong Kong’s Hang Seng and Shanghai’s Composite index rising.

Looking Ahead

As 2024 draws close, the S&P 500 is up 26.5% for the year and 32.6% over the past 12 months. However, some analysts caution that the market may be approaching an inflection point.

Jefferies strategist Christopher Wood noted that the S&P 500’s price-to-sales ratio is nearing record highs and questioned whether the market might peak before Trump’s January 20th inauguration.

Despite these concerns, the prevailing sentiment on Wall Street remains optimistic. As Ross Mayfield, investment strategist at Baird Private Wealth Management, put it: “As we head into December, it’s tough to fade this bull market here, with all the things going right, the election in the rearview and a seasonal tailwind that still has some room to run.”

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