Market Minute: Big Year for Stocks Ends With Cliffhanger

It's been a terrific year for stocks. The S&P 500 is heading into the last few trading days with a 27% year-to-date advance, on pace for a top five annual return since the great financial crisis. It's particularly impressive given last year's big run that emerged out of the nasty bond bear market of 2022. For those expecting a cherry on top, though, it may have to wait. It looks like the post-election "Trump Bump" likely pulled forward the year-end Santa Claus Rally many were hoping for.

Instead, we're likely ending on somewhat of a cliffhanger, The S&P is in the midst of a nice multi-day bounceback following last week's selloff, but is likely to run into some resistance in the 50-point range under 6,1000 in which it traded for almost two weeks prior to the dip that aligned with the Federal Reserve's latest interest-rate cut. The blistering rally in crypto prices also might be taking somewhat of a breather, with bitcoin spending more time under $100,000 than above it, despite a litany of corporate crypto purchases and unceasing hype in the political sphere. 

To be sure, there's been little to no threatening technical breakdown in the main charts for the stock or crypto markets, so most investors should be at ease with some consolidation after this year's big run. 

The same can't be said for a lot else. The Russell 2000 small-cap index erased the entirety of its post-election rally before finding some support this week, and the bounce is fairly meager. "Value" stocks and high-beta trades that ripped after the election gave back all or most of their gains as a category. In other words, the Magnificent 7 are carrying the market on their collective backs again and doing so at nose-bleed valuations. 

The disruptive force for all of this is probably the bond market. Treasury yields are rising at a fairly rapid pace at a time when few thought they would, and the U.S. dollar is proving unbreakable despite the best jawboning efforts of so many on Wall Street who invariably cheer on financial loosening. Instead, it looks like there's enough endurance and inflation in our economy to keep policymakers on their toes. 

Big tech looks like it's still the best game in town, but the rest of the market remains up for grabs as we close out the year.