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Tags: stocks | financial markets

S&P 500 Ends Higher Ahead of Long Holiday Weekend

S&P 500 Ends Higher Ahead of Long Holiday Weekend
(AP)

Friday, 22 December 2023 04:06 PM EST

U.S. stocks gyrated to a mixed close Friday as investors headed into the long Christmas holiday weekend, having digested cooler-than-expected inflation data which firmed bets for Federal Reserve interest rate cuts in the new year.

All three indexes turned less decisive as the afternoon progressed, after an initial rally on data showing that inflation is easing closer to the U.S. central bank's target.

Small caps handily outperformed the broader market, with the Russell 2000 ending sharply higher.

All three indexes notched their eighth consecutive weekly gains, the longest weekly winning streak for the S&P 500 since late 2017.

For the Nasdaq and the Dow, it marks the longest streak of consecutive weekly gains since the beginning of 2019.

The S&P 500 is now within 1% of its record close reached in January 2022. Should it close above that level, that will confirm the benchmark index has been in a bull market since bottoming in October 2022.

"In the context of what we've seen on a year-to-date basis, it's actually pretty extraordinary what we've seen in the fourth quarter," said Michael Green, chief strategist at Simplify Asset Management in New York. "Small caps continue their absolute tear."

"The Russell 2000 has gone from being down on the year as of August to now being up 15.6% for the year," Green said. "This truly has become an 'everything' rally."

A swath of data was released on the last trading day before the long weekend, notably the Commerce Department's Personal Consumption Expenditures (PCE) report, which showed inflation continues to meander down toward the Fed's average annual 2% target.

A separate report showed new orders for core capital goods landed well above analysts' expectations, an upside surprise that bodes well for U.S. corporate spending plans.

Together, they reinforce the conviction that not only will the central bank begin cutting interest rates as early as March 2024, but it might pull off reining in inflation without tipping the economy into recession, a "soft landing."

"The PCE report was very dovish, the topline number showed deflation for the month, it was very positive and perhaps a step toward lowering rates," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York. "Some call for that happen in March we think that's overly optimistic."

"The economy is strong," Ghriskey added. "It doesn't need lower rates at the moment."

Financial markets are pricing in a 74.1% likelihood that the Fed will implement a 25 basis point rate cut in March, according to CME's FedWatch tool.

According to preliminary data, the S&P 500 gained 8.41 points, or 0.18%, to end at 4,755.16 points, while the Nasdaq Composite gained 28.96 points, or 0.19%, to 14,992.82. The Dow Jones Industrial Average fell 13.54 points, or 0.04%, to 37,395.09.

Nike tumbled after the sportswear maker trimmed its annual sales forecast due to cautious consumer spending.

Occidental Petroleum rose after Warren Buffett-led Berkshire Hathaway raised its stake in the oil company, bringing it closer to 28%.

Karuna Therapeutics soared in the wake of Bristol Myers Squib's agreement to acquire the drugmaker for $14 billion in cash.

© 2024 Thomson/Reuters. All rights reserved.


StreetTalk
U.S. stocks gyrated to a mixed close Friday as investors headed into the long Christmas holiday weekend, having digested cooler-than-expected inflation data which firmed bets for Federal Reserve interest rate cuts in the new year.
stocks, financial markets
514
2023-06-22
Friday, 22 December 2023 04:06 PM
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