12_10_23 Weekend Update

12_10_23 Weekend Update

December 10, 2023

Weekly Market Recap (Dec 02 - Dec 09, 2023)

Major Indices Performance:

  • Dow Jones Industrial Average (I:DJI): The Dow saw a modest increase of 0.44% over the week, starting at $36,089.38 and closing at $36,247.87. The index fluctuated within a range, peaking at $36,296.20 and dipping to a low of $36,010.85.
  • S&P 500 (I:GSPC): The S&P 500 experienced a slightly stronger performance with a 0.88% rise, opening at $4,564.37 and ending at $4,604.37. The high for the week was $4,609.23, while the low was $4,546.50.
  • NASDAQ Composite (I:IXIC): Leading the pack, the NASDAQ Composite climbed 1.66%, starting the week at $14,168.66 and closing at $14,403.97. The index reached a high of $14,416.92 and a low of $14,058.52.
  • Russell 2000 (I:RUT): The Russell 2000 index also saw a positive week with a 1.27% gain, moving from $1,857.17 to $1,880.82. The high and low for the week were $1,888.72 and $1,848.78, respectively.

Key Economic Data:

  • US Consumer Sentiment: There was a significant rebound in consumer sentiment, which surged by 16.1% year-over-year, indicating increased consumer confidence and potentially more robust consumer spending in the near term.
  • Inflation Expectations: Inflation expectations have declined, with the year-ahead prediction at 3.1% and long-term expectations at 2.8%, the lowest since March 2021. This could influence the Federal Reserve's decisions on interest rates.
  • Jobs Report: The US economy added 199,000 jobs, and the unemployment rate fell to 3.7%. This robust labor market data suggests economic resilience and may affect the pace and scale of future Federal Reserve rate cuts.

Market Expectations:

  • The positive economic indicators have led to a shift in investor expectations, with the market now anticipating Federal Reserve rate cuts to be delayed until at least May 2024. Treasury yields and the dollar have risen in response, while gold prices have declined.

Upcoming Economic and Earnings Announcements:

  • Economic Data: Investors will be closely monitoring any further economic releases that could provide insights into the Federal Reserve's policy direction and the overall health of the economy.
  • Earnings Announcements: Notable earnings reports scheduled for the upcoming week include Oracle Corporation (ORCL) after market close on December 11, and Adobe Inc. (ADBE) after market close on December 13. These reports could influence market sentiment and sector performance.

Market Trends and Investor Sentiment:

  • The market has reacted positively to the upbeat economic data, with stocks closing higher on Friday. However, the strength in the labor market has dampened speculation about aggressive Fed rate cuts, leading to mixed reactions in index futures and the dollar's strength.
  • Investor sentiment appears cautiously optimistic, with a focus on the upcoming 2024 election, which could bring policy changes affecting the markets.

Actionable Takeaways:

  • Investors may consider monitoring consumer discretionary stocks that could benefit from the rise in consumer sentiment.
  • With inflation expectations declining, sectors sensitive to interest rates, such as real estate and utilities, may be worth watching.
  • The strong labor market suggests resilience in the economy, potentially favoring cyclical sectors.
  • Upcoming earnings reports from major companies like Oracle and Adobe could provide trading opportunities based on their outcomes and forward guidance.