On a historical basis, December is often kind to equities. While seasonal trends aren’t guaranteed to repeat, stocks started the final month of 2024 on a solid note with the Nasdaq-100 Index (NDX) and the S&P 500 adding 0.97% and 0.24%, respectively, on the first trading day of the month.
That adds to already impressive 2024 showings for a variety of broad-based equity exchange traded funds, including the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM), both of which track NDX. Buoyed by strong performances by the technology and communication services sectors, QQQ and QQQM are up more than 26% year-to-date.
Those are impressive runs over just 11 months. Those data points might imply that December upside for large-cap growth stocks is limited. However, some experts believe the stage is set for equities to finish 2024 on a strong note.
QQQ Could Deliver Holiday Cheer
It’s not just favorable seasonality that could pave the way for QQQ and QQQM to rise this month. In addition to December’s positive reputation as it pertains to equities, deVere Group’s Nigel Green said momentum and last month’s presidential election results could be catalysts this month for the Invesco ETFs.
“December is traditionally a favorable month for the markets, often characterized by strong investor activity and positive returns,” Green noted. “This year, expectations remain high, and we put the probability of another positive finish at 80%, aligning with long-standing historical patterns.”
Good news abounds for investors considering QQQ and QQQM or other avenues for adding equity exposure before 2024’s end. Much more than seasonality supports the case for stocks, including QQQ/QQQM holdings. Other potential catalysts include the incoming Trump administration pushing to extend tax cuts and loosening regulations.
“As fiscal policies take shape, including potential tax cuts and regulatory easing, businesses are expected to benefit from lower operational costs and increased growth opportunities,” added Green.
Risk assets this month and as 2025 unfolds face a wild card. The extent to which President-elect Trump will push trade tariffs remains unknown. Market participants likely want clarity on whether or not those levies are policies that will be implemented or just bargaining tools. However, Trump implemented some tariffs in his first term and President Biden did so earlier this year. Those actions didn’t dent QQQ performance, signaling the Invesco ETFs could still reward long-term investors.
“Taking advantage of the evident opportunities will be key,” concluded Green. “While challenges may arise, the potential for continued gains offers a compelling narrative for investors focused on building long-term wealth.”
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