JPMorgan Predicts 6,300

FINANCE
JPMorgan Predicts 6,300

JPMorgan’s trading desk predicts the S&P 500 Index could rise to 6,200–6,300 by the end of December, reflecting a potential 3-4% gain from its current level of 6,032. This projection comes despite a record-setting rally that has made 2023 the index’s best year since 1997. Derivatives analysts point to popular options trades betting on this year-end surge, bolstered by favorable macroeconomic conditions, robust earnings growth, and continued support from the Federal Reserve.

Andrew Tyler, JPMorgan’s Head of Global Market Intelligence, remains optimistic, citing low potential for pullbacks until mid-January. Tyler’s strategy includes favoring value and cyclical stocks like banks, automakers, and the Russell 2000 Index while maintaining exposure to high-performing tech stocks such as the "Magnificent Seven," semiconductors, and data centers.

Historically, the last weeks of December and early January yield strong market returns, averaging 2.6% since 1928, according to Goldman Sachs. However, analysts acknowledge potential headwinds, including fourth-quarter earnings uncertainty and economic policy shifts under President-elect Donald Trump.

Wall Street remains bullish overall, with projections for 2025 pointing to further gains. Major banks, including Goldman Sachs and Deutsche Bank, estimate the S&P 500 could climb as high as 7,000, drawing comparisons to the mid-1990s era of economic resilience and technological breakthroughs.

FINANCE
Fed’s Waller Backs Rate Cut

Federal Reserve Governor Christopher Waller has indicated support for another interest rate cut at the upcoming Federal Open Market Committee (FOMC) meeting in December, though he emphasized that incoming data could alter his stance. Speaking at a conference in Washington, Waller noted, “At present, I lean toward supporting a cut to the policy rate… but that decision will depend on whether data surprises to the upside and alters my forecast for inflation.”

Waller acknowledged recent concerns about inflation stalling above the Fed’s 2% target but expressed optimism about underlying trends in key service categories. He stressed that the Fed’s current monetary policy remains restrictive and that reducing rates further would moderate, rather than eliminate, this restriction. He also pointed to a balanced labor market as an additional reason to consider easing rates, stating, “We should aim to keep it that way.”

Since peaking at 5.25%-5.5%, the Fed has begun easing rates, helping cool inflation from a high of 7.2% in mid-2022. However, persistent service-sector inflation and robust GDP growth of 2.8% in the most recent quarter have some investors questioning whether the Fed will pause rate cuts. Upcoming data, including November’s payrolls report, will be crucial in shaping the Fed’s decision at its Dec. 17-18 meeting.

FINANCE
Judge Rejects Musk’s Pay Package

Elon Musk’s historic Tesla pay package has been rejected again by Delaware Chancery Court Judge Kathaleen St. J. McCormick, despite shareholder support for its reinstatement. McCormick reaffirmed her earlier ruling that Tesla’s board was overly influenced by Musk when it approved the plan in 2018.

The stock options package, initially valued at $2.6 billion, had soared to $101.5 billion by Monday’s closing price. If upheld, the decision could significantly impact Musk’s wealth and his companies' future, though he remains the world’s richest person.

This ruling comes as Musk’s wealth reached an all-time high, surpassing $340 billion, following a Tesla stock rally and a new funding round for his AI startup. Musk’s business empire has seen surging valuations since Donald Trump’s election victory. Tesla and its board, including Musk, declined to comment on the decision.

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.