I hope your Thanksgiving was delightful! As anticipated, the stock market remained relatively calm as many investors took time off for the holiday.

Despite the quiet trading environment, stocks still managed to rally. The Dow experienced a 2% increase, while both the S&P 500 and NASDAQ rose slightly more than 1%. Consequently, the S&P 500 and Dow finished the month at record highs.

The major indices made significant strides throughout November as well. The Dow led with a 7.5% advance, followed by the S&P 500 at 5.7% and the NASDAQ at 6.2%.

Notably, much of the uncertainty that affected the stock market during the first ten months of the year eased following the presidential election.

This brings up an important question: Will December surpass November? The short answer is no.

However, the outlook remains positive. I expect the market’s strength to persist, paving the way for a solid finish to 2024. In today’s Market 360, I will share my reasoning and suggest optimal strategies for December and the New Year.

Can December Deliver More Gains?

Let me clarify that while December may not match November’s performance, it is still traditionally a strong month for the stock market.

Research from Bespoke Investment Group highlights December as one of the four strongest months annually. Their findings show that the Dow averages gains greater than 1% during these four months (December, April, July, and November) over the last century, fifty years, and twenty years.

To illustrate, the Dow has averaged a gain of 1.46% in December over the past century, 1.37% over the past fifty years, and 1.01% in the past twenty years.

Overall, I remain optimistic about economic performance in December, expecting a year-end rally. However, it’s important to note that stocks are currently at or near all-time highs following November’s surge. Therefore, a consolidation of these gains is necessary. A significant portion of last month’s strength can be traced back to the presidential election, alongside early “January effects” and pension fund activities.

Moreover, December often sees investors selling off losing positions to balance gains for tax purposes. This action tends to lead to tax selling, which can affect market dynamics.

Given these factors, December could exhibit a “washing machine” effect where money fluctuates and gradually trends upward. I remain very positive about the market’s potential, anticipating a strong conclusion to 2024.

This Week’s Rating Updates

This week’s focus will shift to major retailers and the state of the labor market.

Wall Street eagerly awaits insights from key retailers regarding their Black Friday and Cyber Monday sales, which will inform us about consumer strength.

The upcoming ADP employment figures on Wednesday, along with jobless claims on Thursday and the jobs report on Friday, will provide further insight into labor market conditions. With inflation stabilizing near the Federal Reserve’s 2% target, attention turns to unemployment statistics.

By week’s end, we should gain clearer insights into the Fed’s perspective on potential rate cuts before the December Federal Open Market Committee (FOMC) meeting.

Considering these developments could impact market movements, it’s crucial to be prepared. I analyzed the latest institutional buying trends and each company’s financial health, leading to updated recommendations in my Stock Grader for 85 blue-chip stocks. (Subscription required.) Of these stocks…

• Eight stocks were upgraded from a Buy (B-rating) to a Strong Buy (A-rating).
• Eleven stocks were upgraded from a Hold (C-rating) to a Buy (B-rating).
• Nine stocks improved from a Sell (D-rating) to a Hold.
• Two stocks transitioned from a Strong Sell (F-rating) to a Sell.
• Twenty-eight stocks were downgraded from a Buy to a Hold.
• Thirteen stocks dropped from a Hold to a Sell.
• One stock was downgraded from a Sell to a Strong Sell.

I’ve included the first ten stocks rated as Buys below, though a more detailed list—including the fundamental and quantitative grades for all 85 stocks—can be found here. You may find at least one of these stocks in your portfolio, so it’s worth reviewing your holdings accordingly.