Was Friday’s double dose of good news a turning point for the market?

Wall Street bulls mounted a valiant effort and pushed the stock market hard on Friday with a double dose of encouraging news. But the rally wasn’t enough to overcome Wednesday’s Fed-driven plunge.

The S&P 500 fell for the second week in a row, losing 2%, while Dow Jones Industrial Average reached it three weeks in a row, with a loss of more than 2.2%. The Nasdaq had a weekly decline of 1.8%, snapping a four-week winning streak. Looking under the hood of the S&P 500, all sectors closed lower for the week despite Friday’s rally. Energy was the worst performing sector followed by real estate and materials.

Investors got several key updates this week that impacted markets — the most consequential being the Fed’s 25 basis point rate cut at the end of its two-day December meeting on Wednesday afternoon. While the move was largely expected, the market took issue with the Monetary Policy Committee’s more hawkish outlook for rate cuts in 2025. The so-called dot plot, which illustrates central banks’ future interest rate expectations, pointed to a committee consensus that it will be appropriate to cut rates only twice next year, half the number of moves indicated back in September.

There is no denying that interest rate expectations are important, but we would caution club members against allowing updates like this to weigh too heavily on investment decisions. While we now know who will be in the White House on Inauguration Day on January 20, and have since received several updates on inflation and the labor market, no one really knows what 2025 will bring. There will be countless updates on inflation, rates, geopolitics and more over the coming months, some of which we can see coming and some of which will completely surprise us. Fed, as it has been and as it should, will adjust its outlook accordingly.

While we certainly don’t want to fight the Fed, we also don’t want to let every word out of a Fed official’s mouth make us run to our brokerage account and make sweeping changes to our exposure. Rather, as long-term investors, we have the luxury of knowing that when the market can overreact to updates from the Fed or any other event, it can provide us with opportunities to buy stocks in great companies with staying power. That’s exactly what we did last week as the market became increasingly oversold, according to our trusty S&P 500 Short Range Oscillator. In other words, stay focused on the fundamentals and use volatility to your advantage.

The other big update came on Friday, with the cooler-than-expected personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred gauge of inflation. Headline November PCE showed an increase of 2.4% compared to the expected increase of 2.5%. Core PCE, excluding volatile food and energy prices, rose 2.8% year-over-year against the expected increase of 2.9%.

Although still above the Fed’s 2% target for inflation, the PCE data was just what the oversold market needed and it was off to the races, turning sharp pre-market losses into a strong Friday rally. Helping the market take another leg higher, Chicago Fed President Austan Goolsbee told CNBC in a Friday interview that “rates will come down quite a bit more” if the economic conditions of the past 18 months continue over the next 12 to 18 months. Goolsbee’s comments calmed a jittery market after Wednesday’s hawkish remarks from Fed Chairman Jerome Powell at his post-meeting news conference.

Not to mention, if interest rates stay higher for longer, that’s not exactly a bad thing, as it almost certainly means the economy is still growing, and we’d much rather be in a market struggling with high interest rates because the economy is strong than a market benefits from low interest rates because the economy is struggling to avoid a recession.

• In other economic news last week, November retail sales came in mixed, with the headline figure beating expectations. However, the results were short-lived when car and petrol sales were removed. November’s industrial production and capacity utilization were short compared to expectations. The third and final reading of third-quarter gross domestic product was better than estimates. In the release, the Bureau of Economic Analysis said the update to GDP, which measures U.S. economic activity, “primarily reflected upward revisions to exports and consumer spending that were partially offset by a downward revision in investment in private inventories. Imports, which are a subtract in calculating GDP, was revised upwards.” November homes start disappointed, but November existing home sales sharpened expectations.

• Within the portfolio, no companies reported earnings, but we initiated a new position in Goldman Sachs during trimming and downgrading Morgan Stanley to a rating of 3. As mentioned in Thursday’s trading alert, we started making the switch because Goldman Sachs’ exposure to investment banks is much larger than Morgan Stanley’s — and if capital markets activity accelerates over the next few years, as many analysts expect, we would like to be invested in an investment bank of the highest quality. We also chose to trim and downgrade our position in Advanced micro-devices for our 3 rating. While it was initially believed that AMD would turn out to be a winner as it provides alternatives to the club name Nvidiawhat we see now is that Nvidia is even more deeply entrenched than we thought, and as companies search for alternatives, they are more focused on custom chip solutions, such as those made by Broadcom and Marvel technologythan they are on general GPU alternatives. While we like Broadcom over the long term, we trimmed and downgraded the stock after it went parabolic after strong earnings the week before.

Going forward, it will be an easy week, with the stock exchange closing at 1 p.m. ET Tuesday and closes all of Wednesday through Christmas Day. Having said that, there is a sale of new homes in November Tuesday. Housing reports have been and will continue to be an important monitoring item for investors as housing cost inflation has proven to be extremely sticky and a key source of upward pressure on inflation, which in turn keeps interest rates high. However, investors should take any positive update from Tuesday’s report with a grain of salt. Mortgage rates rose after the Fed’s interest rate announcement on Wednesday, and investors will be far more focused on figuring out what that means for home sales and affordability going forward than what this forward-looking release says.

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