Fed: Wall Street closes 2023 at record highs on inflation data, Fed takes note
Market watchers increasingly believe the central bank has finished its rate-raising cycle and could potentially cut rates in the first half of next year. Those expectations have fueled a rally in stock markets in recent weeks, helping each of the three major indexes hit their highest closing levels of the year.
Markets last week were expecting a more than 50% chance of the Federal Reserve cutting interest rates in March, but data on Friday showed job growth accelerating and unemployment falling. A separate report found that consumer inflation expectations have fallen. The data has raised hopes that the economy will not fall into recession, that inflation may continue to slow and that expectations of a rate cut in March may be tempered.
Investors will be paying close attention to Consumer Price Index (CPI) data released on Tuesday. The data shows headline inflation is expected to remain unchanged in November, followed by the Producer Price Index (PPI) and the Federal Reserve’s final interest rate decision of the year on Wednesday. .
“I don’t think there’s any reason to react ahead of these three events. It’s just a wait-and-see mode. The trend will remain higher,” said Ken Polcari, managing partner at Kace Capital Advisors. In Boca Raton, Florida.
“Certainly, if the CPI number is weaker than expected, that would be quite optimistic because it would indicate a slowdown in inflation. It’s a Goldilocks landing story.”
The Dow Jones Industrial Average closed at 36,404.93, up 157.06 points (0.43%), the S&P 500 closed at 4,622.44, up 18.07 points (0.39%), and the Nasdaq Composite Index closed at 14,432.49, up 28.51 points (0.20%). Markets have almost fully priced in the central bank keeping interest rates steady in Wednesday’s announcement, but questions remain about the timing of the first rate cut. According to CME’s FedWatch Tool, there’s a 75% chance in May.
The European Central Bank (ECB) and Bank of England (BOE) are also expected to announce their policies later this week.
Semiconductors rose 3.4% as the PHLX Semiconductor Index closed at its highest level since January 5, 2022, led by an 8.99% surge in Broadcom after Citigroup resumed coverage of the chipmaker with a ‘buy’ rating. It will.
Cigna rose 16.68% after the health insurer ended its attempt to negotiate an acquisition of rival Humana and announced a $10 billion stock buyback plan, according to people familiar with the matter. Humana stock price fell 1.04%.
Nike rose 2.33% to help lift the Dow after brokerage Citigroup upgraded its stock to “buy” from “neutral.”
Shares of Macy’s, among other movers, surged 19.44% after an investor group comprising Arkhouse Management and Brigade Capital offered $5.8 billion to take the department store chain private, according to sources. did.
On the NYSE, advancing stocks outnumbered declining stocks by a 1.2:1 ratio, and on Nasdaq, declining stocks outnumbered advancing stocks by a 1.2:1 ratio.
The S&P 500 recorded 54 new 52-week highs, while the Nasdaq recorded 197 new lows and 143 new lows.
Volume on U.S. exchanges was 11.32 billion shares, compared to an average of 10.89 billion shares for the full session over the past 20 trading days.
