The S&P 500 has reached new highs, fueled by the Federal Reserve’s updated monetary policy outlook. What lies ahead for the markets as we approach the end of 2024 and the beginning of 2025?
US stocks continue to exceed expectations, with the S&P 500 hitting a new all-time high, surpassing 6,000 points.
Optimism reigns as markets react to dovish signals regarding the Fed’s December meeting, particularly concerning a possible interest rate cut. This outlook has injected fresh momentum into the stock market rally. However, as inflation concerns linger and Q4 2024 earnings approach, what can investors realistically anticipate for the remainder of 2024 and early 2025?
US Stocks Surge: Focus on Thanksgiving Week
The Thanksgiving week proved exceptionally positive for US markets, with Wall Street bulls capitalizing on a shortened trading week and renewed optimism about the Federal Reserve’s monetary policy. The S&P 500 reached record highs amid expectations of further rate cuts in 2025, spurring increased investor interest.
The CME FedWatch Tool has updated its projections, showing a higher probability of a Fed rate cut in December 2024, with additional reductions likely in March and September 2025. This shift has significantly boosted investor sentiment, with CNN’s Fear & Greed Index now well above the "greed" threshold. Additionally, the options market appears to be in a state of renewed euphoria.
Technical Analysis: S&P 500 on a Bullish Path
From a technical standpoint, the S&P 500 is firmly in bullish territory. Breaking above 6,000 points signals robust market strength, with momentum indicators such as the Relative Strength Index (RSI) indicating an overbought market in full expansion.
However, it’s worth noting that trading volumes during Thanksgiving week were relatively low, somewhat diminishing the significance of these new highs from a technical perspective.
2025 Outlook: Balancing Opportunities and Risks
2025 is shaping up to be a pivotal year for the US stock market. If the anticipated Fed rate cuts materialize, the S&P 500 could benefit from a favorable liquidity environment. However, the rally’s sustainability will hinge on the strength of the economic recovery and the balance between growth and inflation. A resurgence in inflationary pressures could force the Fed to reconsider its dovish stance, potentially derailing the markets.
With valuations at all-time highs, investors must weigh whether corporate fundamentals justify these levels or if a bubble is forming. The upcoming Q4 earnings reports will serve as a critical benchmark for assessing the market’s direction heading into the new year.
Original article published on Money.it Italy 2024-12-02 19:31:00. Original title: Azioni USA su nuovi massimi: quale outlook per il fine 2024 ed inizio 2025?
