A Christmas Carol may be more apt around the holidays, but this week on Wall Street was A Tale of Two Cities. The culprit for the the volatility -- as it always tends to be -- was the Federal Reserve and inflation data, lightning rods that shook up a historically quiet period for markets. Wednesday's Fed-induced meltdown had stocks selling off left and right, but a Friday flourish helped fill some of the gaps lower.
The Dow Jones Industrial Average (DJIA) clocked its worst losing streak since 1974 but is poised to finish the week with an over 500-point daily gain. The S&P 500 Index (SPX) -- flirted with record closes to start the week and now sits below 6,000, while the tech-heavy Nasdaq managed a record close on Tuesday, but now sits below the psychologically-significant 20,000 level. Amid this whipsaw price action, all three major indexes are pacing for weekly losses, though much tamer thanks to Friday's melt-up.
3 Sectors to Watch in 2025
It was a notable week for three buzzy sectors investors should be bookmarking for next year. Lithium stocks have struggled, but is the sector oversold? Drone drama may be shaking up New Jersey residents, but three drone stocks boast favorable technical setups. If you missed the mad dash for artificial intelligence (AI) stocks, a stellar consolation prize could be the nuclear energy sector charged with powering these AI projects. One sector stalwart in fact leads the S&P 500 in gains this year.
Pullbacks Create Opportunity
Wednesday's selloff put many stocks at intriguing entry points for contrarian investors. It might be time to buy the dip on Carvana stock, while 2024 favorite Hims and Hers Health (HIMS) is testing a key trendline. Sports betting stock DraftKings is stumbling into "oversold" territory, while software stock Arista Networks (ANET) and cybersecurity leader CrowdStrike (CRWD) are flashing bullish signals.
Drugmakers Making Noise
There was a lot of movement among pharmaceutical and biotech stocks this week as well. Pfizer (PFE) and Teva Pharmaceuticals (TEVA) both surged, while Vertex Pharmaceuticals (VRTX) collapsed after lackluster data for its non-opioid painkiller. And in the hyper-competitive weight-loss drug race, stalwart Novo Nordisk (NVO) received some bad news to end the week.
Keep Tabs on the "Fear Gauge"
An underrated storyline this week was Wall Street's "fear gauge," the Cboe Volatility Index (VIX) coming to life amid Wednesday's selloff. VIX futures call buyers were identified as a plot point by Senior V.P. of Research Todd Salamone in his Monday Morning Outlook. Elsewhere, get ready for a slow trading week with these Christmas-time signals.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
