S&P 500: Business Optimism Pushes Consumer Discretionary and Value Stocks Higher

Stocks Edge Higher, S&P 500 and Dow Hover at Weekly Highs

The S&P 500 and Dow Jones Industrial Average maintained their weekly highs on Friday, buoyed by optimism around robust business activity in the U.S. economy. A business activity index surged to a 31-month high, reflecting growing confidence in deregulation and anticipated pro-business policies under President-elect Donald Trump. The Russell 2000 outpaced major indexes, climbing 1.3%, while large-cap benchmarks posted more modest gains.

Sector Performance and Key Movers

Consumer discretionary led sector gains with a 1.37% rise, driven by Tesla’s 4% advance as it remained a popular “Trump trade.” The industrials and consumer staples sectors followed closely with gains of 1.22% and 0.97%, respectively. Meanwhile, the technology and communication services sectors struggled, declining 0.3% and 0.4%, respectively.

Alphabet continued to face selling pressure, dropping 1.7% amid monopoly concerns raised by the Department of Justice.

Value stocks showed strength, with the S&P 500 Value Index climbing 0.6% as investors rotated out of growth-focused equities. However, Nvidia lost 3.1% despite being an AI market bellwether, as its recent forecast failed to ignite enthusiasm.

Corporate Highlights

Several companies reported sharp movements. Gap Inc. surged 9.5% after raising its annual sales forecast, signaling a strong start to the holiday shopping season. Elastic rose 15% on better-than-expected quarterly earnings, while Reddit dropped 6% following reports of financial maneuvering by its parent company. Super Micro Computer extended its rally, up 11% amid confidence in its Nasdaq compliance plans.

Intuit fell 4.7% despite a strong quarterly performance, as it guided for a revenue decline in its consumer segment. Honeywell gained 1% after announcing a $1.33 billion divestiture of its personal protective equipment business. Meanwhile, MicroStrategy rebounded 10% as Bitcoin approached $100,000, spurring gains for the cryptocurrency-focused company.

Broader Market Sentiment

The Fed’s policy outlook remained a focal point, with markets pricing in a 59.6% chance of a 25-basis-point rate cut in December. Analysts highlighted the potential impact of Trump’s fiscal and trade policies on inflation, which could temper the Federal Reserve’s pace of monetary easing. Additionally, geopolitical risks, including missile exchanges between Ukraine and Russia, kept investors vigilant.

Market Forecast

The S&P 500 appears poised for further upside, supported by improving economic indicators and positive sentiment surrounding deregulation. However, technology and communication services stocks may face headwinds due to regulatory scrutiny and valuation concerns. Traders should monitor Fed commentary and geopolitical developments for potential volatility in the coming weeks. A continued rotation into value and industrial sectors could define near-term opportunities.