Wall Street’s primary indices initiated Tuesday’s final week of the year on a positive trajectory. This surge came from growing speculation regarding early rate cuts by the Federal Reserve, uplifting investor sentiment post-Christmas holidays.
Bullish Sentiment and Record Proximity:
Expectations of a dovish policy shift by the Fed in response to signs of cooling inflation have propelled the benchmark S&P 500 index toward its previous record high achieved in January 2022. A close above this level would affirm the index’s bullish trajectory since its bottom in October 2022.
US stocks closed higher after the Commerce Department’s PCE report indicated a continual descent of inflation toward the Fed’s targeted 2 percent annual rate.
This report contributed to the eighth consecutive week of gains for the major indexes, marking the S&P 500’s longest winning streak since late 2017.
Market Analysis and Rate Cut Expectations:
Market sentiment remains buoyant, with expectations of notably reduced interest rates fueling the ongoing rally.
Traders’ bets on a 25 basis point rate cut by March 2024 stood at about 83 percent, a significant surge from the 21 percent recorded in November, according to the CME Group’s FedWatch tool.
Sector Performance and Notable Stocks:
Except for healthcare, all major S&P 500 sector indexes reflected gains. Intel witnessed a 4.0 percent rise following Israel’s agreement to grant the company $3.2 billion for a new $25 billion chip plant.
This development propelled the Philadelphia semiconductor index to a record high, while the Russell 2000 index reached its highest level in 20 months.
Market analysts anticipate a continued shift towards smaller and mid-cap stocks as a dominant theme entering 2024.
However, low trading volumes are expected this week due to year-end holidays, with minimal key economic data anticipated except for the jobless claims report.
Current Index Performance:
As of midday, the Dow Jones Industrial Average was up 0.24 percent, the S&P 500 had gained 0.25 percent, and the Nasdaq Composite had risen by 0.31 percent.
Shares of Manchester United surged by 2.2 percent after billionaire Jim Ratcliffe finalized a long-awaited deal to receive a 25 percent stake in the football club.
Additionally, Gracell Biotechnologies saw a substantial 59.8 percent increase following AstraZeneca’s announcement of acquiring the China-based firm for up to $1.2 billion.
Market Metrics and Momentum:
Advancing issues surpassed decliners by a significant margin on the NYSE and Nasdaq.
The S&P index registered 26 new 52-week highs without new lows, while the Nasdaq registered 129 new highs against 29 new lows.
