S&P 500, Nasdaq continue to soar to new highs
S&P 500, Nasdaq, and Dow Jones Indices All See Positive Growth
The S&P 500 hit a new closing high for the year, with the broad market index rising by 0.59%, finalized at 4,594.63. The Nasdaq Composite advanced 0.55%, reaching 14,305.03, while the Dow Jones Industrial Average added 0.82%, closing at 36,245.50. The rise brings the Dow to a new high, with a 2023 gain of nearly 9.4%.
Stocks have been performing well, bringing the S&P 500 to its highest level since March 2022. Notable stocks that have contributed to these heights include Ulta Beauty and Boston Properties, which rose 10.8% and 11.2%, respectively. Paramount also saw a substantial increase of 9.8%.
Federal Reserve Chair Jerome Powell has overridden market expectations for interest rate cuts, stating that it is “premature to conclude with confidence” that monetary policy is “sufficiently restrictive.”
Market Interpretation of Powell’s Cautious Remarks and the Effect on Yields
Market reaction was interesting, with yields falling as equities rallied during the day, particularly the yield on the 10-year Treasury note, which fell over 13 basis points to 4.213%.
Mona Mahajan, a senior investment strategist at Edward Jones, acknowledged various driving forces in the market, including inflation, the Fed’s apparent move to the sidelines, and a gradual cooling in the economy. She described the shift in the market as a “Goldilocks cooling,” neither too hot nor too cold, a phenomenon embraced by the markets.
The Market’s Response and November’s Rally
November saw a significant rally, with the S&P and Nasdaq rallying 8.9% and 10.7%, respectively, their best performances since July 2022. The Dow surged 8.8% for its best month since October 2022.
The Rally Extends into December
This week, the S&P 500 rose by 0.77%, the Dow increased by 2.4%, and the Nasdaq advanced by 0.38%. This marked the fifth consecutive week of gains for the major averages.
What to Expect Next
December generally sees positive returns in the equity market, especially in years preceding a presidential election. Bob Doll, Chief Investment Officer at Crossmark Global Investments, noted that if the market continues to believe that the Fed has resolved the inflation issue and plans to cut rates next year, but also expects the economy and earnings to remain stable, stocks are expected to rise further. With the Fed set to decide on rates on Dec. 13, the market is eagerly anticipating their decision.
