Weekly Stock Market Update & SPY Technical Analysis
Investors are preparing to wrap up the final days of the year, with many wondering whether indexes will close near their record highs. This year, the Dow Jones surpassed 40,000 for the first time, the S&P 500 exceeded 6,000, and the Nasdaq climbed above the 20,000 mark. These psychological milestones were reached due to the bullish momentum seen throughout the year. However, momentum has shifted in recent weeks as investors await the start of the new year. A new year often brings fresh opportunities, but it takes time to evaluate where capital will flow and which sectors will dominate.
Currently, industries like artificial intelligence, data centers, autonomous driving, quantum computing, robotics, and even flying cars are in focus. However, this focus could shift as new advancements emerge. One effective strategy to identify winning stocks in the coming year is to analyze the next earnings season. Companies that report strong earnings early in the year and provide robust projections for the quarters ahead often outperform the market.
Corporate profits are projected to grow by more than 10% again in 2025, and interest rates are expected to decline further. These two factors—corporate earnings and interest rates—are key drivers of stock prices, and both suggest continued growth in the year ahead. Our outlook for 2025 remains strongly bullish. However, we anticipate a potential 7–10% market correction at some point during the year. Such a correction would help alleviate overbought conditions and allow the market to resume its upward trajectory in a healthier, more sustainable manner.
SPY Technical Analysis
Last week, SPY broke below a key trend line that had served as support since the August lows. With the index now below this level, sellers may gain more control in response to any negative catalysts. While this week’s economic calendar is relatively light, the jobless claims report set to be released on January 2 could be the most significant event to watch.