If you ask Wall Street traders how they feel about markets right now, the word euphoric comes up a lot. So does confident, optimistic, fantastic.
Because what traders want — stable-to-falling interest rates, a change to a more business-friendly administration, falling inflation, a decent economy — is basically in place.
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The Standard & Poor’s 500 Index and the Dow Jones Industrial Average both finished the week at record levels. November 2024 closed with both indexes producing their best monthly performances of the year — 5.73% for the S&P 500 and 7.54% for the Dow — and their best months since November 2023.
Related: The Trump Trade rally has stocks at record highs. Where do we go from here?
So, is the Nasdaq Composite is a piker? No, it was up 6.21% in November, a decidedly gaudy return. Except for May’s 6.88% gain when investors seemed enthralled with all things Nvidia (NVDA) and artificial intelligence.
Not even a pesky issue — like maybe the November jobs report won’t be so great — seems to be a worry.
And the jobs report is the week’s big event, which lands Friday morning before U.S. markets open. The consensus estimate is the Labor Department will report the economy created 202,000 new jobs in November, up from 12,000 in October, and the unemployment rate might move up slightly to 4.2% from October’s 4.1%.
Things are that bullish.
As things stand now, the S&P 500 is up 26.5% for the year, with Nasdaq up 28% and the Dow up 19.2%.
All that is after a 22.4% S&P 500 return in 2023, with the Nasdaq up a whopping 43.4% and the Dow up 13.7%.
And bulls will note that two weak Dow performers in 2023 — Walgreens Boots Alliance (WBA) and Intel (INTC ) — were replaced in 2024 by Amazon.com (AMZN) and Nvidia.
Bulls will also point out that the S&P 500 has risen two years in a row only eight times since 1950. And this: The year after two years of 20% gains that usually means another bullish year.
And lastly this: December has been historically the third-best month for stocks since 1950.
Even the small-cap Russell 2000 Index is up more than 20% this year, thanks to a 10.84% gain in November alone.
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Tesla helps market breadth grow
Moreover, the stock market’s breadth has continued broadening dramatically in recent weeks with surging financial and consumer discretionary stocks. Real estate is the one sector among 11 S&P 500 sectors that is not up at least 11%
The financial sector has been driven by gains for Synchrony Financial (SYF) , the largest provider of private-label credit cards, leveraged buyout giant KKR & Co. (KKR) , up 96% this year, and investment banking giant Goldman Sachs (GS) , up 58%.
Discretionary stocks have surged in part because of because of Tesla (TSLA) , the electric vehicle maker founded by Elon Musk, who’s now close to President-elect Donald Trump.
Tesla shares were up 38.2% just in November after stumbling badly in the first half of the year. Its market cap is now $1.1 trillion.
Related: Political fever over EVs has Tesla expert buzzing with confidence
Remember when technology shares ruled all? The sector is up 34.2% so far in 2024.
Most of that gain came in the first and second quarters. The sector was up just 1.44% in the third quarter and 3.5% so far in the fourth.
Watch out for a bullish market that gets too bullish
Thanks to hope that the Trump administration will smoothly transition in and quickly deregulate everything, bullishness reigns in financial markets for the end of the year and well into 2025. The jobs report, if weak, will cause a hiccup.
The bullishness that’s taken over Wall Street, however, is starting to feel a little like 1998 and 1999 during the Dot.com bubble, or just prior to the financial crisis in 2007.
Analysts are pushing their year-end S&P 500 estimates well above Friday’s 6,032. And there are many who see the S&P 500 reaching to at least 6,500 in 2025. Economist Ed Yardeni and analysts at Deutsche Bank already are betting on 7,000.
And, of course, Bitcoin reached as high as $99,768 on Nov. 22. Many people thought it would breach $100,000 this past week but only was trading at $96,534 Saturday evening. By one measure, relative strength index, it was overbought on Nov. 22.
All this assumes no global shock that takes everyone by surprise such as:
- War that erupts across the Middle East and sends energy prices soaring.
- Escalation in the Ukraine-Russia War.
- Some sort of Chinese move on Taiwan.
- A sudden sharp weakening of a key industry, like banking.
Earnings can move markets, too
A few companies might be able to move markets this week with their earnings. Among the most prominent reporting are:
- Due Monday: Zscaler ZS, the cloud security company.
- Due Tuesday: Salesforce (CRM) , the cloud-based sales and human resources company and a growing player in artificial intelligence.
- Due Wednesday: Dollar Tree (DLTR) and Campbell Soup (CPB) .
- Due Thursday: Supermarket giant Kroger (KR) , fashion retailer Lululemon Athletica (LULU) and Hewlett-Packard Enterprise (HPE) .
Salesforce shares are up 25.4% this year and rose 13.3% in November. A member of the Dow, the shares stumbled badly in the spring but are up 51% since May 30. With its new AI-powered Agentforce service, earnings are projected to rise more than 16% to $2.45 a share from $2.11 a year ago. Citigroup raised its price target to $368, but analyst Tyler Radke maintained a neutral rating.
Kroger faces the competitive pressures from Walmart (WMT) , Costco (COST) . Its solution is to buy the Albertsons chain, but that bid has been opposed by many competitors and state and local governments. Earnings and revenue estimates suggest only small gains. About half of 23 analysts covering the stock rate the shares a buy.
Related: Veteran fund manager sees world of pain coming for stocks
