The S&P 500 recorded its longest winning run in almost five years during a turbulent, low-volume session ahead of the Christmas break. This was due to indications that pricing pressures in the US were abating. Both the Nasdaq 100 and an international stock market index had very long runs; the tech-heavy Nasdaq’s run was the longest since July 2021. The US bond market saw advances for the fourth week in a row, which is a record since March.
According to Louis Navellier of Navellier & Associates, “the soft landing narrative is fully in charge: The economy remains strong while inflation keeps trending down.” “The only ones with lumps of coal in their stocking this season are the bears,” predicts the seasoned growth investor, who believes the year will conclude at highs.
Friday saw a meagre 0.2% increase in the S&P 500 as stocks indexes were affected by a decline in Apple Inc.’s shares. The massive iPhone manufacturer’s market worth has increased by almost $1 trillion this year. Another negative was Nike Inc., which fell 12% on Friday after the sportswear manufacturer announced a strategy to reduce costs and a worse sales forecast.
The Nasdaq had a 0.1% increase after reaching all-time highs earlier in the week. On Wednesday, events took a sharp turn when a late-afternoon slump was attributed to so-called zero-day, or ODTE, options.
It’s also possible that the Supreme Court’s decision to postpone ruling on former President Donald Trump’s immunity from prosecution contributed to Friday’s brief increase in market volatility.
As the session began the “Santa Claus rally,” a seasonal tendency when stocks tend to soar into the first few days of the new year, some on Wall Street are planning for greater market gains ahead.
Craig Johnson, chief market technician at Piper Sandler, noted, “Since 1928, the market has rallied an average of 1.7% between the last five days of December and the first two days of the new year, with a 79% positivity rate.”
The gauge would return to being within reach of its all-time high with such progress. He anticipates that the S&P 500 will only see minor declines, with the gauge continuing to rise beyond its highs from early December.
Friday’s report, which showed that the Federal Reserve’s favoured underlying inflation indicator barely increased in November, initially helped stocks.
Even if some Fed members resisted this week, it helped solidify investor expectations for earlier and more significant interest rate decreases early in the upcoming year. Interest rate eases by more than 150 basis points in 2024, which is double the Fed’s prediction, is what swaps traders are banking on.
As of Thursday, global bonds were poised for yet another victory, according to Bloomberg statistics. Treasury bonds had mixed trade on Friday, with the US 10-year bond’s yield around 3.9%.
Following Friday’s PCE data, Ben Jeffery of BMO Capital Markets stated, “We’ll argue the market was biassed for a downside surprise which has translated to a somewhat counterintuitive price response.” “We anticipate that Treasuries will take a long winter’s nap as a result of the early close and long weekend.”
Further statistics released on Friday indicated that consumers were beginning to believe that inflation in the largest economy in the world was heading in the right direction. Simultaneously, a US new-home sales number surprisingly fell; however, this could only be a short setback to the anticipated housing market revival.
Despite a weeklong decline that saw the dollar hover near five-month lows versus its Group-of-10 competitors, the dollar remained stable. Due to shippers’ extended diversions to escape terrorist strikes in the Red Sea, oil prices had their largest weekly rise since October in the commodities market.