US stocks close out 2023 with longest weekly winning streak since 2004

Major indexes rise despite recession and inflation fears

S&P 500 gains $8 trillion, jumps 24% in 2023

Nasdaq 100 posts best annual performance since 1999

Topic

Details

The most important expectations

Details

Markets reflect investors’ optimism for rate cuts in 2024

Former Treasury secretary: Investors may be underestimating inflation risks

Stock markets are highly vulnerable to a mild recession if the US economy slips

Volatility index VIX remains low near pre-pandemic lows

Markets reflect investors’ optimism for rate cuts in 2024

US stocks closed out 2023 with their longest weekly winning streak since 2004, despite concerns about a recession and inflation.

The S&P 500 (S&P 500) rose for the ninth consecutive week, gaining 0.3% on Friday to close at 4,602.62 points.
The index thus achieved annual gains of 24%, marking its best performance since 2013.

The Nasdaq 100 also rose for the eighth consecutive week, gaining 1.1% on Friday to close at 15,658.39 points.
The index thus achieved annual gains of 30.4%, marking its best annual performance since 1999.

The most important expectations

The latest gains in stocks come amid investor optimism about rate cuts in 2024. US inflation data have recently shown a decline, leading to growing expectations that the Federal Reserve will cut rates later next year.

However, there are still some concerns about a recession and inflation, which could lead to market declines in the future.

Brian Barish of Cambiar Investors said, “The belief that major central banks have definitely done enough to suppress the rise in inflation in 2022-2023 is driving the rise.”

He added, “It’s not hard to imagine new factors that could worry the markets, such as elections, the large government bond financing requirements for the US, and/or any idea of inflation coming back again. But for now, there’s not much news and not many sellers.”

Former Treasury Secretary Lawrence Summers said investors may be underestimating inflation risks as markets move quickly toward expectations for the Federal Reserve’s easing of monetary policy.

Summers added, “I think there is a risk that the market may be underestimating its estimates: we have not made much progress on inflation as people hope, and there will not be much room for the Fed to turn to easing its policy as investors hope.”

According to RBC Global Asset Management

stock markets are highly vulnerable to a mild recession if the US economy slips into a mild recession. Eric Lassas, an economist at RBC, said it is likely that interest rates will be cut in 2024, but the global economy has not yet fully absorbed the full impact of nearly two years of monetary tightening.

Lassas added, “What is being prepared now is a big jump in earnings, which is only possible in a smooth recession scenario.”

The market’s calm is also evident in the VIX volatility index, which remained below 13 this week, near pre-pandemic lows and well below the five-year average.

Adam Tornekvist of LPL Financial said, “Momentum is still in overbought territory, but it is bullish. While conditions of extreme overboughtness increase the likelihood of sideways or downward movement, long-term returns have been positive and above average compared to similar periods.”

US stocks close out 2023 with longest weekly winning streak since 2004

US stocks close out 2023 with longest weekly winning streak

Related Topics