The S&P 500 and Nasdaq Composite reached new record levels on Monday, kicking off December on a strong note after a robust November performance. The S&P 500 edged up 0.24% to close at 6,047.15, while the Nasdaq surged 0.97%, ending at 19,403.95. However, the Dow Jones Industrial Average dipped 0.29%, closing at 44,782.00 after briefly surpassing the 45,000 mark.

Sector and Stock Highlights

Tech and consumer discretionary stocks led gains, with Tesla jumping 3.5% following an upgrade by Roth MKM, which cited CEO Elon Musk's alignment with President-elect Donald Trump as a growth catalyst. Super Micro Computer soared nearly 29% after an internal investigation cleared it of misconduct. Retail giant Amazon also added over 1%, benefiting from strong Cyber Monday sales.

Energy stocks underperformed as natural gas prices fell more than 4%, with ConocoPhillips and other sector leaders losing over 2%.

Market Outlook

Jay Hatfield, CEO of InfraCap, predicted a steady but subdued market climb into year-end, estimating the S&P 500 could reach 6,200, a modest gain of under 3%. "We've priced in much of the optimism surrounding the pro-business administration, but details on policies are crucial," he noted.

November's market momentum, fuelled by a post-election rally, was significant for small-cap stocks. The Russell 2000 gained over 10%, marking its best month of the year. Historically, strong Novembers tend to precede solid Decembers, with Canaccord Genuity highlighting a median December gain of 1.96% following 20%+ year-to-date rallies.

Consumer Confidence and Economic Indicators

Despite investor optimism, UBS warned of "froth" in financial markets, citing record consumer confidence in stock prices, which may not align with broader economic sentiment. Meanwhile, the ISM manufacturing index for November improved to 48.4, reflecting a contraction but showing signs of recovery.

Retail and Holiday Trends

Cyber Monday sales are projected to hit a record US$13.2 billion, up 6.1% from last year, according to Adobe Analytics. Key retail stocks like Bath & Body Works and Lululemon saw gains, while Target and Kroger struggled.

Analysts' Perspectives

Oppenheimer and Bank of America remain bullish on equities, with the latter seeing long-term benefits for stocks over bonds despite elevated valuations. Morgan Stanley and UBS identified opportunities in stocks like Cloudflare, Okta, and Five Below, citing near-term growth potential and resilience against policy risks.

As December unfolds, historical trends and consumer sentiment suggest a favourable finish to the year, though market participants remain cautious about potential volatility ahead.

CNBC