Market Mayhem: A December to Remember
The Unexpected Twist
As we approach the end of the year, market enthusiasts were bracing for a winning month, backed by historical price action studies. Yet, December has taken a surprising turn, leaving many scratching their heads. The S&P 500 finished November at 6,032, leaving room for a potential turnaround. Could this be the fabled mid-December low, dubbed “The Only Free Lunch on Wall Street”? If so, it’s certainly making its presence felt.
Federal Reserve’s Move
As anticipated, the Federal Reserve reduced the fed funds rate by 25 basis points to a target range of 4.25%-4.5%. The Fed’s projections indicate only two rate cuts in 2025, citing low unemployment and slightly elevated inflation. Market expectations, reflected in the CME FedWatch Tool and fed funds futures, were aligned with this move. So, why did the stock market plummet?
A Brutal Day on Wall Street
Wednesday’s market performance was nothing short of dismal. The S&P 500 plummeted almost 3%, while the Nasdaq and Nasdaq 100 dropped a staggering 3.6%. The S&P 400 and S&P 600 suffered declines of around 4%. NYSE breadth was abysmal, with a -2,719 reading, the worst since June 2022. Up volume/total volume on the NYSE stood at a meager 15%, and advances/issues registered a dismal 7%.
Technical Indicators Flash Red
The 5/13 exponential moving average (EMA) crossover has turned bearish, and trendline support off the lows is being tested. As the market navigates these treacherous waters, one thing is clear: this December will be one for the books.
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