Market Week: December 18, 2023
Presented by William Prentice, AWMA®, CFP®, CIMA®
KEY DATES/DATA RELEASES
12/19: Housing starts
12/20: Existing home sales
12/21: GDP
12/22: Personal income and outlays, durable goods orders, new home sales
THE MARKETS (as of market close December 15, 2023)
Last week saw stocks rally after the Federal Reserve policy statement released last Wednesday suggested no more interest rate hikes, while predicting rate cuts in 2024 (see below). Despite losing momentum at the end of the week, stocks enjoyed their seventh consecutive week of gains, with the S&P 500 marking its longest winning streak since 2017 and the Dow's longest since 2018. Each of the market sectors ended the week higher, led by real estate, consumer discretionary, materials, and financials. Bond yields continued to be volatile, dropping 32.0 basis points as investors tried to determine the direction interest rates will take. Crude oil prices ended a stretch of six weeks of losses. The dollar registered its largest weekly drop in a month against a basket of currencies.
Wall Street began last week on a positive note as investors awaited the upcoming release of the latest inflation data and the Federal Reserve meeting. Each of the benchmark indexes listed here closed higher last Monday, led by the Dow, the S&P 500, and the Global Dow, which each rose 0.4%. The Russell 2000 and the Nasdaq inched up 0.2%. Ten-year Treasury yields slipped minimally to 4.23%. Crude oil prices rose 0.3% to $71.45 per barrel. The dollar ticked higher, while gold prices fell nearly 1.0%.
Markets closed generally higher last Tuesday. The Consumer Price Index (see below) showed inflation held steady with the Federal Reserve's final meeting of 2023 on tap for Wednesday. The Dow and the S&P 500 gained 0.5%, while the Nasdaq added 0.7%, with all three indexes closing at their highest levels since January 2022. The Global Dow ticked up 0.2%, while the Russell 2000 dipped 0.1%. Crude oil prices gave back recent gains, falling 3.6% to $68.73 per barrel. Yields on 10-year Treasuries fell 3.3% to 4.20%. The dollar fell 0.3%, while gold prices rose less than 0.1%.
Wall Street reacted favorably to the outcome of the Federal Reserve's meeting last Wednesday (see below) as stocks climbed to record highs. Each of the benchmark indexes listed here posted solid gains led by the Russell 2000, which climbed 3.5%. The Dow, the Nasdaq, and the S&P 500 each rose 1.4%, while the Global Dow added 1.1%. Ten-year Treasury yields fell to 4.03%, the lowest rate since August, while two-year yields tumbled 30.0 basis points to 4.43%, all in response to the Fed's statement. Crude oil prices swung higher, closing at $69.74 per barrel after gaining 1.65%. The dollar fell 0.9%, while gold prices rose 2.3%.
Stocks continued to climb higher last Thursday as investors rode momentum from the Fed's aforementioned policy statement. The Dow jumped 0.4% to hit another record high, while the S&P 500 (0.3%) and the Nasdaq (0.2%) notched gains. But the interest-sensitive small caps of the Russell 2000 posted notable gains after advancing 2.7%, while the Global Dow rose 1.3%. Ten-year Treasuries dipped to 3.93%, falling below 4.0% for the first time since August. Crude oil prices rose 3.2% to $71.70 per barrel. The dollar declined 0.9%, while gold prices climbed 2.7%.
Stocks cooled to end last week. Of the benchmark indexes listed here, only the Nasdaq (0.4%) and the Dow (0.2%) advanced. The Russell 2000 lost 0.7%, the Global Dow fell 0.2%, while the S&P 500 was flat. Crude oil prices rose for the fourth day out of five, gaining 0.7%. The dollar ended a three-day losing streak after gaining 0.6%. Gold prices dipped 0.6%.
The final estimate of third-quarter gross domestic product is available this week. The second estimate had the economy accelerating at an annualized rate of 5.2%. The November data on personal income and outlays is also out this week. Consumer spending rose 0.2% in October, while the personal consumption expenditures price index, a measure of inflation, was flat. Consumer prices continue to inch lower, although they remain above the Federal Reserve's target of 2.0%.
Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI, Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates).
News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.
The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 largest, publicly traded companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indexes listed are unmanaged and are not available for direct investment.
Prepared by Broadridge Advisor Solutions. © 2023 Broadridge Financial Services, Inc.