Investing Update: 3 Stocks For 2025
What I'm buying, selling & watching
Friday saw the S&P 500, Dow and Nasdaq all fall over 1.5% on a very strong jobs report. It signals a stronger than expect economy and likely upends the Fed’s rate cutting path.
The unemployment number came in at 4.1%. That was just below the expected number of 4.2%.
Toping off the strong report was the 256,000 jobs that were added making it the 48th consecutive month of job growth. That’s tied for the second longest streak in history.
This has boosted the 10-year Treasury up to 4.77%. That’s the highest level since November 2023. Both the 20-year and 30-year hit 5% this week.
I mentioned the importance of the 10-year Treasury and how I expect it to hit 5% in my Investing Update: 2024 Recap & 2025 Outlook last week. You can see what the higher rates are doing to stocks. The S&P 500 is now down 4.5% from the December highs.
Market Recap
Weekly Heat Map Of Stocks
As January kick off, you can see how it’s up 67% of the days. Remember the saying, as January goes, so does the rest of the year.
As the index has been holding up, under the hood hasn’t looked so well. Only 11% of stocks are in an uptrend. That’s the percentage of stocks above both their 50 and 200-day.
Just 46% of stocks are trading above their 200-day. That’s the lowest since November 2023.
I love this view and chart from Grant Hawkridge. It shows examples of the index holding up while stocks are rolling over.
Small caps have now entered correction territory. They’ve now fallen over 10% from their November 25th high.
Here is where this bull market stands after 24 months.
S&P 500 Concentration
This was the most eye catching chart I saw this week. It shows just how much the Magnificent 7 stocks played into the overall S&P 500 return over the past two years.
In 2023, the S&P 500 returned 24.2%. Excluding the Magnificent 7, it would have been 4.1%. In 2024, the S&P 500 returned 23.3%. Excluding the Magnificent 7, it would have been 6.3%.
This then gives a good visual of the weighting for each of the Magnificent 7 stocks. I don’t know if this means anything overall for the market moving ahead but it is really fascinating. The leaders are definitely leading.
