Wall Street ends higher in final stretch of 2023, rate cuts in view
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Traders work on the floor of the New York Stock Exchange, on the first day back after the Christmas holiday, on Dec 26, 2023.
PHOTO: AFP
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NEW YORK - US stocks extended their rally on Dec 26, kicking off the final week of 2023 with expectations that the Federal Reserve will begin cutting interest rates as soon as March.
All three major US stock indexes rose in light trading, with the S&P 500 touching its highest intraday level since January 2022. All three are on track for monthly, quarterly and annual gains.
Interest rate sensitive megacap stocks and chip shares led the upward momentum.
On Dec 22, the three indexes notched their eighth straight weekly gains - their longest weekly winning streaks in years - as economic data indicated inflation is easing down closer to the Fed’s average annual 2 per cent target.
“It’s going to be a fairly quiet trading session. The momentum stays towards the upside, but I don’t think we’re going to see any strong volume that would suggest we could be in for a strong rally,” said Mr Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
“We had a good inflation number on Friday. If inflation continues to move down in January and February, there’s a good chance that the Fed may cut (rates) earlier than anticipated.”
The S&P 500 is on track to post its biggest quarterly gain in three years, and is within 1 per cent of its all-time closing high reached in January 2022.
Closing above that level - 4,796.56 - would confirm the benchmark index has been in a bull market since touching the bear market nadir, the closing low reached in October 2022.
Stocks’ eight-week rally shifted into overdrive two weeks ago after the Fed signalled the end of its rate hike cycle and opened the door to potential rate cuts
At last glance, markets had baked in a 72.7 per cent likelihood of a 25 basis point reduction in the Fed funds target rate as soon as March, according to CME’s FedWatch tool.
According to preliminary data, the S&P 500 gained 20.31 points, or 0.43 per cent, to end at 4,774.94 points, while the Nasdaq Composite gained 81.97 points, or 0.55 per cent, to 15,074.95.
The Dow Jones Industrial Average rose 160.69 points, or 0.43 per cent, to 37,546.66.
Energy shares enjoyed the heftiest percentage gain, boosted by surging crude prices as Middle East strife ratcheted up supply concerns,
Shares of Manchester United rose
Gracell Biotechnologies surged after AstraZeneca said it will buy the China-based firm for up to US$1.2 billion (S$1.5 billion).
Intel Corp advanced following the Israeli government’s agreement to endow a US$3.2 billion grant for a US$25 billion plant the chipmaker plans to build in southern Israel. REUTERS
