After already digesting November’s consumer price index report, they will reflect on the Fed’s latest Summary of Economic Projections (SEP). In the SEP, the Fed saw the core PCE - Personal Consumption Expenditures – falling to 2.4 in 2024. Before that, it expected PCE at around 2.6% in 2024.
The small drop matters. It is a basis of the market belief that the Fed will ease the credit tightening cycle. The stock market, through the S&P 500 (SPY), gained for seven straight weeks. The biggest holdings by allocation on the index are Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), and Nvidia (NVDA).
Apple easily defied bears. After trading as low as $165 in November, investors added to the smartphone giant. AAPL closed at $197.57 and is approaching the $199.62 high. At $3.073 trillion in market cap, bearish investors are foolish if they bet against Apple.
Microsoft traded flat last week at -0.94%. At a 35.9x price-to-earnings multiple, the software giant’s growth in ChatGPT should add to its profitability.
Amazon trades at a 78.31x P/E at $149.97. AMZN stock is ready to break out again as holiday shopping volumes grow on the e-commerce site.
Nvidia indicated a “double top” at around $500. At $488.90, NVDA stock is at a turning point. It may break out or fall back. Its direction depends on market sentiment.
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