Market Summary – January 2, 2024

Last Week’s Summary

  • S&P 500 Index rose 0.34%
  • International Equities rose 0.1.73%
  • Emerging Markets fell 3.18%
  • U.S. 10-Year Treasury Yield fell to 3.87%
  • Initial Jobless Claims rose to 218k

What to Watch for This Week

  • T, 1/2/24 S&P Global US Manufacturing PMI
  • W, 1/3/24 MBA Mortgage Applications, ISM Manufacturing, FOMC Meeting Minutes
  • Th, 1/4/24 Initial Jobless Claims, ADP Employment Change
  • F, 1/5/24 Nonfarm Payrolls, Unemployment Rate, Factory Orders, Durable Goods Orders

Weekly Market Recap

On the final trading day of 2023, Wall Street experienced a momentary pause as stocks consolidated near their all-time highs. The unremarkable Friday preceding the holiday break saw U.S. equities interrupting a Five-Day upward streak.

Despite signs of fatigue following an extraordinary $8 Trillion surge in the S&P 500 throughout the year, the Index continued its impressive performance by notching its ninth consecutive week of gains. Traders exhibited resilience, seemingly disregarding uncertainties surrounding the Federal Reserve, concerns about a potential recession, and various geopolitical risks.

Propelled by the flourishing artificial intelligence sector, extended market positions, and a pervasive “FOMO” sentiment, the S&P 500 surged by an impressive 24% in 2023. After a year marked by substantial market swings and deceptive signals, the U.S. 10-Year Yield ended 2023 nearly where it started.

This anticlimactic outcome contrasts with the yield’s rollercoaster journey, plummeting to as low as 3.25% in the aftermath of March’s banking crisis, only to surpass 5% a few months later. The Benchmark 10-Year U.S. Rates climbed to almost 3.9% on the final Friday of the year.

Crucial inflation data endorsed a prevailing narrative predicting central bankers’ aggressive rate cuts in 2024, fueling robust gains for both equities and bonds in the last two months of the year.

The lack of market anxiety was evident in the persistently low levels of the VIX, the market’s favored volatility gauge, which remained below 13 for the week-close to pre-pandemic lows. In a contrasting trend, oil experienced its most significant annual decline since 2020, with a decrease exceeding 10%.

Despite the backdrop of war and OPEC+ production cuts, prices failed to rise in a year dominated by supply growth outside of the OPEC+ grouping.

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