S&P 500 trades within a whisker of all-time high: Markets Wrap
US stocks kicked off the final week of 2023 with gains, extending a rally that put the market on the brink of a record
In a session marked by low volume, the S&P 500 traded just 0.5% away from its all-time high. Despite warnings about a pullback amid overbought levels, risk appetite continued to power equities on speculation the Federal Reserve will cut rates as early as the first quarter of 2024.
The so-called Santa Claus rally, which typically encompasses the last five trading sessions of the year and the first two of the new one, has a pretty strong record. Since 1969, the S&P 500 has averaged a gain of 1.3% over the seven-day period, according to the Stock Trader’s Almanac.
“The focus will quickly pivot to whether the market will be able to sustain its momentum into the New Year, and that may depend on how long the good vibes surrounding potential Fed rate cuts last,” said Chris Larkin at E*Trade from Morgan Stanley.
The S&P 500 rose to around 4,770. A gauge of chipmakers climbed to a record, with Intel Corp. up 4.5%. The Russell 2000 of small caps gained 1%.
To Adam Turnquist at LPL Financial, consistent buying pressure on stocks of such magnitude is not only rare, but a bullish sign for improving investor sentiment and market momentum.
“And while all winning streaks eventually end, history suggests the rally may not,” he noted.
Should the S&P 500 complete a ninth straight week of gains, it will be its longest winning run since 2004.
Since 1957, nine of the gauge’s 17 previous eight-week winning streaks pushed to a ninth week, but only three of those made it to 10 weeks, according to Larkin at E*Trade from Morgan Stanley.
Craig Johnson at Piper Sandler says that any pullbacks will be modest and short-lived as investors follow the eight-week uptrend toward new highs.
“It still appears likely that we can end the year at the highs,” said Louis Navellier, chief investment officer at Navellier & Associates. “No reason to not ride this market through the end of the year.”
Stock volumes were down across the board, with trading in countries such as Canada, New Zealand and Australia shut. European markets were closed too.
In corporate news, FedEx Corp. entered into an accelerated share repurchase agreement with Mizuho Markets Americas. The White House declined to overturn a sales ban on Apple Inc.’s smartwatches in the US, prompting the tech giant to seek relief in federal court. Intel will invest a total of $25 billion in Israel after winning incentives. Bristol Myers Squibb Co. agreed to buy RayzeBio Inc. for about $4.1 billion. US-listed shares of China-based gaming companies climbed on news China approved 105 domestic online games.
Building Confidence
Treasuries were mixed, with the 10-year yield around 3.9%. That’s after the US bond market booked a fourth-straight week of gains. A $57 billion sale of two-year notes drew strong demand after cheapening.
Elsewhere, oil rose as tensions remained high over shipping disruptions in the Red Sea due to a spate of Houthi attacks against vessels in the vital waterway, and after US military strikes in Iraq. Shipping stocks were broadly lower after Maersk said it’s preparing to resume shipping through the Red Sea.
The economic calendar is thin this week, with home prices rising for a ninth straight month. Early data from Mastercard SpendingPulse shows that US holiday retail sales rose at a much slower pace than in 2022.
Key events this week:
China industrial profits, Wednesday
Bank of Japan issues Summary of Opinions from December monetary policy meeting, Wednesday
Japan industrial production, retail sales, Thursday
US wholesale inventories, initial jobless claims, Thursday
UK Nationwide house prices, Friday
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.4% as of 1:48 p.m. New York time
The Nasdaq 100 rose 0.5%
The Dow Jones Industrial Average rose 0.4%
The MSCI World index rose 0.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.1036
The British pound rose 0.1% to $1.2708
The Japanese yen fell 0.1% to 142.52 per dollar
Cryptocurrencies
Bitcoin fell 3.4% to $42,055.47
Ether fell 3% to $2,204.86
Bonds
The yield on 10-year Treasuries was little changed at 3.89%
Commodities
West Texas Intermediate crude rose 3.2% to $75.91 a barrel
Spot gold rose 0.3% to $2,058.23 an ounce
