SOTS 2nd Hour: 2024 Market Recap, 2025 Top Picks, & Apple’s China Headwinds 12/31/24

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David Faber (0:59)

Good Tuesday morning. Welcome to another hour of Squawk on the Street. I'm David Faber with Mike Santoli and Leslie Picker. We're live from Postline at the New York Stock Exchange. Carl and Sarah have the morning off. Let's give you a quick look at the markets and Treasuries, of course, a half hour into trading. You can see the S&P is up about a quarter of 1 percent, and the 10-year hanging right around that 4.5 percent yield. Leslie.

Leslie Picker (1:20)

Not bad for the final trading day of the year, and we are 30 minutes into that trading session. Here are some big movers. We are watching today more volatility in shares of Bitcoin proxy micro strategy down more than 10 percent over the last week despite this morning's gains up about 1.8 percent currently. Shares of Fannie Mae and Freddie Mac were surging overnight. Down a little bit now, investor Bill Ackman writing a lengthy social media post about the names, saying he expects President-elect Trump to remove Fannie and Freddie from conservatorship, potentially making them private companies again. Ackman arguing the move should generate more than $300 billion in additional profits for the federal government, and remove $8 trillion in liabilities from the government's balance sheets. Keep an eye on Big Tech, all of the Magna 7 and the red over the last week. Tesla, Amazon, and Microsoft, the biggest laggards down 3 percent or more. Although they did comprise about 53 percent of the total return of the S&P in 2024

Mike Santoli (2:18)

Almost all of it built up by mid-July, and since that point, they've been indifferent, I think. Some of it has done well. Amazon has done well since then. Apple, of course. But in general, it was really the first half of the year was very concentrated. Second half, a little bit less so. I will also point out, I mentioned earlier, last day of the year, you got this, people trying to get ahead of this reversal trade, laggards into leaders. You actually have very strong breath today, even though the S&P is only up about two-tenths of 1 percent. So the recent leaders, the big gap names in the index are taking a bit of a rest on a balance. And it's a little bit of just sort of gamesmanship and mechanics around the end of the year.

David Faber (2:58)

Well, Mike, as we sort of end the year and think about next year, which begins on Thursday, and I'll be here, what mechanics do we want to be thinking about early in the year? Same kind of thing in terms of the laggards starting to at least outperform for a brief period of time?

Mike Santoli (3:13)

For a try for sure. I do think the fact that we have had a lot of below-the-surface selling and a lot of stocks looking like they've already kind of taken their medicine for a little while might give a decent entry point for the new year flows. I do think we have been contending with elevated expectations. You mentioned some of the sentiment indicators. That's probably gotten moderated over the last couple of weeks. Tactical sentiment is a little bit more, I wouldn't say troubled, but it's a little bit less overexcited. However, strategists for the year ahead, median target for the S&P 6,600, that's 11% up from today's level. The lowest target, I think, is more relevant, is 64 Lowest published target for year end, that's up 8%.

Nobody sees this market doing worse than 8%. That's a big difference from last year, when actually, strategists didn't see any upside at the median.

Leslie Picker (4:01)

So should we do the opposite of what they said?

Mike Santoli (4:03)

It's interesting. Look, the stock market goes up two-thirds of all years. You know what I mean? It's tough to necessarily say that's an outright contrarian fall, but it does say the market might be harder to please in the coming year, just because everyone's already sort of positioned psychologically and financially for good things.