Wall Street kicked off the final week of 2023 with a rally for stocks, extending a rally that has brought the market near record levels.
In a low-volume session, the S&P 500 was down about 0.5% from its all-time high of 4,796.56. Despite warnings of overbought levels and tight positioning, stocks continued to rise on bets that the Federal Reserve will cut interest rates as early as March.
"The focus will soon turn to whether the market can maintain momentum into the new year, which may depend on how long the good atmosphere around the Fed's potential interest rate cuts lasts," said Chris Larkin, an analyst at Morgan Stanley E*Trade.
The so-called Santa Claus market typically covers the last five trading days of the year and the first two trading days of the new year, and this trend has a fairly strong history. Since 1969, the S&P 500 has gained an average of 1.3% over seven days, according to Stock Trader’s Almanac data.
The S&P 500 rose to 4,774.75 after completing its longest weekly gain since 2017. An increase of more than 5%. The Russell 2000 small-cap index rose 1.2%.
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LPL Financial analyst Adam Turnquist believes that continued buying pressure on such a large stock is not only rare, but also a bullish signal for improving investor sentiment and market momentum. "While all winning streaks eventually end, history suggests rebounds may not."
If the S&P 500 rises for a ninth straight week, it would be its longest winning streak since 2004.
Chris Larkin said that since 1957, nine of the 17 previous eight-week winning streaks on this metric have extended into Week 9, but only three of those have reached 10 weeks.
Piper Sandler analyst Craig Johnson said any pullback would be mild and short-lived as investors follow an eight-week uptrend toward new highs.
"We still have the potential to end the year on a high," said Louis Navellier, chief investment officer at Navellier & Associates. "There's no reason not to ride the tailwind through the end of the year."
Trading volumes fell across the board, with exchanges closing in countries including Canada, New Zealand and Australia. European markets are also closed.
Buyers dumped Treasury bonds on Tuesday, seeking to lock in higher yields amid expectations the Federal Reserve will cut interest rates sharply in 2024.
Indirect bidders, including other central banks, secured a record 77.6% in the 52-cycle bill auction, and bidders in the same category secured 71.6% in the sector’s 6-month bill auction, the third-highest ever Big share. Meanwhile, two-year bonds are selling for less than the yield they paid when they were issued, indicating higher-than-expected demand.
Swaps contracts tied to the Fed meeting show there is more than a 90% chance the Fed will lower its current target interest rate range of 5.25% to 5.5% in March. Traders expect nearly 160 basis points of rate cuts in 2024, more than double what Fed officials suggested earlier this month in a new round of quarterly forecasts.
Elsewhere, oil prices rose amid disruptions to shipping in the Red Sea and a series of Houthi attacks on ships in the vital waterway.
The economic calendar is light this week, with home prices rising for the ninth consecutive month. U.S. holiday retail sales are growing at a much slower pace than in 2022, early data from Mastercard SpendingPulse shows.
Focus and weather vane of Wednesday’s trading day:
① 07:50 Annual profit rate of China’s industrial enterprises above designated size in November
② 17:00 Swiss ZEW Investor Confidence Index in December
③ 23:00 Richmond Fed Manufacturing Index in December
④ API crude oil inventories in the United States for the week to December 22 at 05:30 the next day
Analysis of major currency trends:
Euro: EUR/USD rose, closing at 1.1041, an increase of 0.31%. Technically, the initial resistance for the upward movement of the exchange rate is at 1.1057, the further resistance is at 1.1073, and the key resistance is at 1.1102; the initial support for the downward movement of the exchange rate is at 1.1012, the further support is at 1.0984, and the more critical support is at 1.0968.
GBP: GBP/USD rose, closing at 1.2723, an increase of 0.22%. Technically, the initial resistance for the upward movement of the exchange rate is at 1.2740, the further resistance is at 1.2759, and the key resistance is at 1.2787; the initial support for the downward movement of the exchange rate is at 1.2693, the further support is at 1.2664, and the more critical support is at 1.2646.
Japanese Yen: USD/JPY rose, closing at 142.392, an increase of 0.08%. Technically, the initial resistance for the upward movement of the exchange rate is at 142.625, the further resistance is at 142.896, and the key resistance is at 143.167; the initial support for the downward movement of the exchange rate is at 142.083, further support is at 141.812, and the more critical support is at 141.541.
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Indonesia
2023-12-27
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