Markets “In A Nutshell” for December 2, 2024

Markets “In a Nutshell” for December 2, 2024

Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.4%, the S&P 500 was up 1.1%, and the NASDAQ rose 1.1%. Foreign stocks (MSCI EAFE) were also up, rising 0.9%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 4.19%.  (Data source: Wall Street Journal)

Thankful for a Smooth Ride

Markets have had a historic bull market over the past 26 months with very little volatility. Over the last 10 years on average, the S&P 500 sees a 2% or more daily decline 9 times per year. So far in 2024, we have only seen 3 days of a 2% decline and in 2023 we only saw 1 day of a 2% decline. At the same time, the S&P 500 has set more than 50 new all-time highs this year alone, well above the 10-year average of 30 new all-time highs. It is impressive for the market to have very little volatility with all the headlines we have gotten from, tensions in the Middle East, war in Ukraine/Russia, the Fed raising rates and now cutting rates, and most recently the Presidential election. Investors are hopeful the smooth ride can continue but should be grateful for the recent run we have seen.

S&P 500 Concentration

The S&P 500 has had a great 2023 and 2024 largely due to the tech-oriented mega-cap stocks having a historic run higher. One interesting effect of this is that the top 10 companies in the S&P 500 now make up nearly 35% of the index. Meaning the other 490 companies only make up 65% of the index. While this is not necessarily a bad thing, it is uncharted territory as this is the most concentrated the index has ever been. Apple, NVIDIA, and Microsoft alone make up nearly 20% of the index. This does leave the index vulnerable if we see these top companies struggle and is a reason why investors are looking to diversify more as the S&P 500 has become more concentrated than ever before.

Intel CEO Pat Gelsinger Retires

Intel has had a rough year, down nearly 50% for the year and down over 50% over the last 5 years while the NASDAQ is up over 120% over the same period. Although Intel is still valued at over $100 billion, it has never reached the peak it saw during the dot com boom when it peaked in 2000. Intel has been crushed by its competitors recently as AMD is up over 230% in the last 5 years and NVIDIA is up over 2,300% in the last 5 years. Investors are hopeful a new CEO will help Intel as the stock popped nearly 4% in pre-market trading this morning.(CNBC)

Quiz:

How much is the S&P 500 Equal Weight Index up in 2024? (Scroll Down for Answer)

1.     14%
2.     17%
3.     21%
4.     24%

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

Answer:

2.    17%.  The equal-weight S&P 500 is a way investors can avoid the high concentration in the S&P 500 as each company has a weighting of 0.2%.

Investing involves risk, including the possible loss of principal. The information contained herein has been prepared solely for informational purposes. Nothing contained herein should be construed as a recommendation to either buy or sell any security or economic sector, or implement any strategy discussed. Please consult with your financial advisor, accountant, and/or attorney before acting on this information. MGO-Inc is a DBA of OneSeven.  OneSeven is an investment advisor registered with the U.S. Securities and Exchange Commission (SEC).  Registration with the SEC does not imply a certain level of skill or training.  Investment Products are Not FDIC Insured, Offer No Bank Guarantee, and May Lose Value.