S&P 500 hits new high for 2023

The S&P 500 soared to a closing high for 2023 on Friday, extending November’s rally into the new month. Traders confirmed that the broad market index rose by 0.59%, ending the session at 4,594.63. The tech-heavy Nasdaq Composite advanced 0.55% to 14,305.03, while the Dow Jones Industrial Average added 294.61 points, or 0.82%, to close at 36,245.50.

The Dow rose to another new high on Friday, bringing its 2023 gain to nearly 9.4%. The S&P 500 closed at its highest level since March 2022. Stocks that contributed to the broad market index soaring to these heights include Ulta Beauty and Boston Properties, which rose 10.8% and 11.2%, respectively, while Paramount popped 9.8%.

Fed Chair, Jerome Powell’s Remarks

Federal Reserve Chair Jerome Powell pushed back against the market’s expectations for interest rate cuts ahead, saying it is “premature to conclude with confidence” that monetary policy is “sufficiently restrictive.” However, yields fell even after Powell’s cautious remarks, as traders interpreted them as a signal that the central bank is at least done with hikes. The yield on the 10-year Treasury note fell by more than 13 basis points to 4.213%.

Mona Mahajan, the senior investment strategist at Edward Jones, is quoted as saying, “There’s a trifecta of drivers here. The first is the inflation. Second is the Fed seeming like it may be stepping to the sidelines, and then third is this cooling in the economy that is starting to unfold, but at a very gradual pace. It’s almost like a Goldilocks cooling. It’s not too hot. It’s not too cold. And that’s exactly what markets are embracing.” Mahajan also added that markets seem to be pricing in rate cuts, but not until the back half of 2024.

Blowout November Rally

Friday’s moves come on the heels of a blowout November rally. November’s gains snapped a three-month losing streak. The S&P and Nasdaq rallied 8.9% and 10.7%, respectively, to notch their best monthly performances since July 2022. The Dow surged 8.8% for its best month since October 2022.

December normally a strong period for equities

This month is typically a strong one for equities, with Decembers that precede a presidential election generally delivering outsized returns. “It’s a seasonally strong period,” said Bob Doll, chief investment officer at Crossmark Global Investments. “If the market still buys the notion that the Fed has solved the inflation problem and that they’re going to cut rates next year, but that the economy’s gonna be okay and earnings will be fine — and that’s the consensus line at the moment — then that’s good enough for stocks to go higher.”