*Performance since 7/1/2022. For more details on the performance calculation and methodology of Alpha Picks, click here.

► Fed cut rates by 25bps as expected, and equity markets reacted Wednesday, with the Nasdaq closing down over 3.5%, the S&P 500 -3%, and the Dow -2.6%, down over 1,000 points.

► Retail sales exceeded expectations, climbing 0.7% m/m, and economists suggest holiday sales are tracking for a gain of just over 3% y/y from November 1 through December 24.

► Treasury yields were mixed, with the 10-year yield (US10Y) climbing to 4.54% and the 2-year yield (US2Y) and 5-year yield (US5Y) sliding to 4.33% and 4.40%, respectively.

► Bitcoin (BTC-USD) surged past $107,000 for the first time, driven by optimism surrounding the incoming Trump Administration’s support for a U.S. Bitcoin strategic reserve; the cryptocurrency has rallied more than 50% since Trump’s election.

► Geopolitical tensions escalated following the assassination of a Russian general. Threats of a 10% tariff on all Chinese imports may also impact global growth and inflation.

Alpha Picks is a rigorous, data-driven model that offers Strong Buy-rated stocks believed to have the highest probability of capital appreciation based on a proprietary quantitative model. Two Strong Buy-rated stocks are selected monthly on the first trading day of the month and the 15th or the closest trading day thereafter.

Federal Reserve Cuts Rates

The Federal Reserve’s decision to cut interest rates by 25 basis points to a range of 4.25-4.50% marks its third consecutive reduction, a total of 100 basis points since September. Read More. 

Quantum Stock Mania

Semiconductor stocks have continued on a downtrend over the last week following an antitrust probe into Nvidia (NVDA), which is investigating potential breaches of monopoly laws, and after the U.S. Department of Commerce imposed new restrictions on China’s access to AI chips and machinery. Read More. 

Geopolitical Events: Russian General Assassination

The global economic landscape is becoming increasingly complex amid rising geopolitical tensions. Complicated by the assassination of Russian General Igor Kirillov outside of his Moscow apartment by a remotely activated explosive device, Russia’s Investigative Committee has detained a 29-year-old Uzbek man as a suspect. Read More. 

GICS Sector Performance

While all sectors were in the red by Friday morning, the Tech sector (XLK) was the top performer for the week amid the quantum computing mania and continued AI-driven growth. The Consumer Discretionary (XLY) sector remained a top-three performer due to resilient consumer spending and optimism surrounding continued interest rate cuts. Read More. 

Value vs. Growth

Growth stocks outperformed their growth counterparts, driven by positive economic data and this week’s FOMC news. Read More. 

Crypto Primed for Deregulation and New Policies

Crypto markets continue to gain momentum, led by Bitcoin (BTC-USD), which topped $107,000 for the first time. While some nations are tightening crypto regulations, the Trump Administration has expressed interest in regulatory reforms that ease regulatory constraints and will spur innovation and attract more institutional investors to the digital asset space. Read More. 

The U.S. Dollar Index (DXY) declined slightly on Monday, following last Friday’s jobs report that hinted at another Fed rate cut later in the month. Overall, the dollar outperformed major currencies for the week. Gold experienced a weekly gain of nearly 2% as traders positioned themselves ahead of next week’s FOMC meeting. Read More. 

Since 1987, $100 invested in the Russell 1000 (large caps) has outperformed the Russell 2000 (small caps) by 46% as of December 16, 2024 - the largest skew since the Dot-Com Bust in 1999 when large caps led by 73%. After that peak, small caps closed the gap over 12 years, eventually outperforming in 2011. If the current trend normalizes, small caps may offer a more favorable risk-reward.

► FOMC: The Fed slashed interest rates Wednesday by 25 basis points to a range of 4.25–4.50%, now projecting two rate cuts in 2025 versus four in its previous forecasts—a more cautious approach to monetary easing.

► Inflation: Inflation remains a concern. The Fed’s updated projections now see inflation at 2.5% by the end of 2025, up from the previous estimate of 2.1%.

► Labor Market: November's unemployment rate of 4.2% continues to show resilience. The Fed's latest projections anticipate the rate to be at 4.3% in 2025—indicating a slight easing in labor market conditions. The upcoming jobs report will closely monitor signs of continued strength or potential softening in employment trends.