November rally revives FOMO trade picks ahead of 2024

November was a monumental month for the stock market (^DJI, ^GSPC, ^IXIC), rallying to snap a three-month losing streak. Month-over-month gains could be signaling investors' return to FOMO trade staples.

Yahoo Finance Markets Reporter Josh Schafer takes a closer look at Cathie Wood's ARK Innovation ETF (ARKK) and meme stock trends as strategists attempt to make heads-or-tails of market uncertainty heading into 2024.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- I want to look at some of these stocks that were up huge in November and why they were up so big. We're calling it the FOMO trade. Because basically, at some point with the S&P 500 up almost 20% this year, at some point, investors want to get in. And when they get in, they're going to try and get into some of these names that haven't necessarily rallied this year. And that's some of the sectors that we saw were the biggest winners in November, when you take a look at something like regional banks rising about 16% over the last month. You take a look at Cathie Wood's Ark Innovation Fund. That fund had not done too well this year, up about 10% going into November. It's up 50% on the year now.

So some stocks right there that just really hadn't had a great run, you can see there the last three-month chart. So that big tick up in November quite a run for Ark there. And then, Brad, you mentioned meme stocks. And it's been interesting to watch when we talk about meme stocks. Originally, it wasn't GameStop. We were talking about the Roundhill meme ETF, which I believe is actually going to be closing. But a big part of that like, one of the holdings in there was Coinbase.

BRAD SMITH: Yeah.

- And Coinbase is what took off. We weren't talking GameStop, AMC, necessarily. We were talking about the actual meme ETF itself, which normally is just more a barometer for investors wanting to be risk on. And seeing, all right, we're not talking about how high we're going to go anymore, or if we're going to get more rate hikes, we're starting to talk about rate cuts, when we get into some of this risk.

And so that was what we saw from the trade, overall, Though, I should mention, just two days ago, I was writing that GameStop was up 20%.

SEANA SMITH: Well, that's the thing about this market. It could be a daily thing in terms of the narrative and what you are writing about specifically. Because even over the last several weeks, you have had a number of pieces about a soft landing. And maybe, the fact that we're actually going to be able to navigate this. And we could see higher highs, as we look, ahead to next year.

There's been a handful of calls out saying that the S&P 500 is going to hit 5,000, going to hit 5,100 by the end of 2024. On the flip side, though, we also heard from JP Morgan raising some issues as to why we should maybe be a little bit more pessimistic going into the new year. And when you take a look, I guess, from the strategists that you have been talking to, how, on the fence, do you think they are just in terms of this uncertainty out there? And the fact that not something would necessarily break all of a sudden, but certainly we could change course in terms of the narrative of the market.

- It's interesting because I think a year later, last year, everyone was worried right. And everyone wanted to talk about some of the things that JP Morgan highlighted in that 2024 outlook, when they called for what was it, 4,200 or 4,500 on the S&P 500. And basically, flat or lower. And they were highlighting the recession risks. The fact that consumer might slow down.

And I think the bulls now feel a little bit more comfortable in saying, well, we've been listening to that for a year. We've been listening for a year that the consumer is going to slow down, that certain parts of this market are really going to get hammered. And it hasn't fully happened. So I think people feel a little bit more confident in that. And, essentially, saying, all right. The economic indicators have largely held up. Maybe they can hold up for another year. And we can avoid and skirt that recession. That's been one of my bigger takeaways. Thinking about how people feel about '24.