Happy Friday! Stocks have tumbled for days but we have a data-packed edition to close the week out on a high note.

Let’s dive in.

What happens after stellar years, historically

The stock market has turned lower for multiple trading sessions in a row but history favors the long-term optimists. 

The S&P 500 is coming off its 18th best finish since 1950 with a 23.3% return in 2024. 

In the last five decades, the S&P 500 has gained more than 20% in a year on fifteen separate occasions. The average annual return of those years hovers at 27.3%.

In the 12 months after each of those strong performances, the index’s average return hovers at 14.1%, according to data from LPL Financial. 

Only three times has the S&P 500 turned negative in the year after gaining 20% or more.

If that pattern holds, then, the benchmark index should fare well in 2025.

At the very least, history suggests there are better odds of it going up than down.

Indeed, strategists across Wall Street remain bullish for 2025 with an average forecast of a 14% gain for the S&P 500, according to the 16 firms tracked by Opening Bell Daily. 

The Magnificent Seven stocks’ valuations continue to balloon, and analysts expect earnings growth to improve for names outside that batch, too.

David Miller, chief investment officer for Catalyst Funds, sees Nvidia, Meta, Apple and other tech giants leading the way in profits and earnings for the foreseeable future. 

“Monopolies have historically been the best businesses to own, and the S&P 500 is now dominated by monopolies,” Miller said. 

To be sure, risks still loom, history be damned. Odds of resurgent inflation — and so fewer Fed rate cuts — are still on the table, and president-elect Trump’s tariffs remain a wild card. 

Bank of America’s Sell Side Indicator, a contrarian signal that tracks strategists’ average recommended allocation to stocks, climbed in December to its highest level since 2022. 

The indicator “suggests that the 20%+ annual returns we've seen over the past two years are likely behind us, but still points to a relatively healthy price return of 10% over the next 12 months,” wrote BofA strategist Tyson Dennis-Sharma in a note Thursday, adding that euphoria remains elevated among investors.

The SSI is one point away from triggering the “sell” signal, which it last touched in February 2021, less than a year before the stock market peaked. 

For what it’s worth, the S&P 500 has only gained 20% for three consecutive years once before, to close out the 1990s dot-com bubble. 

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Elsewhere:

📉 Jobless claims dropped to 8-month low. The Department of Labor announced Thursday the US saw 211,000 initial jobless claims filed in the week to December 27, down from 220,00 the prior week and below expectations for 221,000. Continuing claims also dipped, and economists say the data reflects low hiring and low firing. (Yahoo Finance)

🚗 Tesla notched a record-high quarterly deliveries to end 2024. The EV maker sold 495,570 vehicles in the final quarter of the year, but the stock dropped as the 2024 total remained slightly lower than 2023. It marked the first time in years Tesla saw a year-over-year decline in global vehicle deliveries. (WSJ)

🏠️ Mortgage rates keep climbing. Freddie Mac data showed rates on the most popular US home loan rose to 6.91% on Thursday, up from 6.58% a week earlier. That’s the highest level since early July. (Bloomberg)

Traders see 64% odds bitcoin hits $125,000 before the end of 2025, according to Kalshi, the biggest US prediction market:

Rapid-fire:

• Hindenburg Research published a short bet against Carvana, calling the business a “mirage” (CNBC)

• South Korean crypto mogul Do Kwon pleaded not guilty on Thursday in his first US court appearance (AP)

• Cattle futures climbed to an all-time high as the limited US beef market faces an extra cold winter (Bloomberg)

• Ken Griffin’s flagship hedge fund at Citadel returned 15.1% in 2024 (CNBC)

• Capital Economics predicts AI will boost the stock market to a third year in a row of 20% returns (Business Insider)

• Bitcoin’s hash rate sits at an all-time high, which signals the growing strength of the blockchain (Pomp Letter)

Last thing:

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