U.S. Stocks Slide Amid Hawkish Fed Stance

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly/month performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

6.    Major indexes weekly chart and technical support & resistance levels

U.S.

For the week of Dec 20, major stock indexes declined during the week, although a rally on Friday helped major indexes recover some of their lost ground. Losses were broad-based, though smaller-cap indexes generally fared worst. The event dominating sentiment during the week appeared to be the Fed’s rate announcement following its highly anticipated policy meeting that concluded Wednesday. Refer to below major indexes performance table for the week.

Key highlights for the week and next:

1.    Fed rate cut. At final FOMC meeting of 2024, the Fed did cut rates by 0.25%, bringing the fed funds rate to 4.25% - 4.5%. However, it caught markets off guard with a hawkish tilt to its updated economic projections and indicated only two rate cuts in 2025, below the September estimate of four rate cuts. Markets initially reacted negatively, with bond yields moving higher and stocks moving sharply lower. The Fed pointed to two reasons for its more cautious approach to rate cuts – the outlook for inflation and the unknowns around tariff policy in the year ahead. 

2.    A strong U.S. economy. The Q3 annualized GDP figures came in at 3.1%, above forecasts of 2.8%, driven by healthy consumption of 3.7%. The Fed GDP-Now forecast also calls for Q4 U.S. GDP to come in around 3.2% annualized. This data confirms that U.S. economic growth is on pace to end the year above trend, which is typically in the 1.5% - 2.0% range.

3.    Friday morning’s release of the personal consumption expenditure (PCE) inflation report. The core PCE index—the Fed’s preferred measure of inflation—rose by 2.8% year-over-year in November, in line with October’s reading and slightly lower than consensus expectations. The better-than-feared report seemed to help push stocks higher on Friday to finish the week above their worst levels. 

SPX sectors in play

All the 11 SPX sectors recorded weekly losses. Technology(XLK) stocks outperformed relatively better while Energy(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All the three major indexes closed lower this week. Nasdaq Composite(COMP) recorded 1^st weekly loss after four-weekly up streak, SPX closed 2^nd weekly down and Dow closed with 3^rd weekly loss. All three indexes weekly charts are still in uptrend while Dow closed below its 50dma, SPX closed just above its 50dma and Nasdaq still well above its 50dma. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated as disappointing data raised concerns about the economy. The Shanghai Composite Index(SSE) fell 0.7%, while the blue chip CSI 300 lost 0.14%. In Hong Kong, the benchmark Hang Seng Index declined 1.25%. (Refer to the above weekly performance table).

Key highlights for the week and outlook for China/HK:

1.   China November activity data pointed to the uneven nature of China’s recovery amid a looming trade war with the U.S. Retail sales expanded a below-consensus 3% from a year ago, down from October’s 4.8% rise and highlighting Chinese consumers’ unwillingness to spend. Fixed asset investment grew 3.3% in the January to November period, lagging forecasts, and less than the 3.4% increase in the calendar year to October. Property investment in the period fell 10.4%. Industrial production was a bright spot, rising a better-than-expected 5.4% from a year earlier amid demand for robots, passenger cars, and solar panels. 

2.    China's youth unemployment rate eased for the third consecutive month after hitting its highest level this year in August. The jobless rate for 16- to 24-year-olds, excluding students, was 16.1% in November, down from 17.1% in October, according to official data. Urban unemployment remained steady at 5%, as expected. 

3.    Property downturn stabilizes. New home prices in 70 cities fell 0.1% in November, slowing from October’s 0.5% drop, according to the National Bureau of Statistics. While November’s dip marked the 17th monthly decline, it was the slowest pace since June last year, according to Reuters. China’s property market has showed signs of stabilizing after Beijing unveiled a sweeping package in late September aimed at reviving the crisis-hit sector. Analysts anticipate that the government will ramp up efforts to stimulate growth as China’s economy faces higher tariffs and other challenges under the incoming Trump administration.

Click below SSE and .HSI indexes for their weekly charts. 

SSE weekly chart

.HSI weekly chart

Singapore

The Straits Times Index (STI) fell 2.37% this week, closing at 3,719.93—its lowest level in six weeks. The losses were broad-based, with 29 of the 30 constituent stocks declining, while one closed flat. This decline may indicate profit-taking as investors wrap up for the year. Despite this, the STI has delivered a year-to-date (YTD) price return of 14.8% and maintains an uptrend on its weekly chart. Below is the weekly performance of the index stocks for reference.

Click below for STI weekly chart.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.