Alphabet’s Class A and Class C stocks were within the top five decliners in the S&P 500. The Dow was outperforming as the index gives less weighting to tech stocks. Lastly, the Treasury Department’s quarterly refunding report this morning showed that the supply of longer-term accumulation distribution indicator bonds won’t surpass expectations. Lower supply allays concerns about the market’s ability to absorb debt and pushes yields lower. The odds that the Federal Reserve cuts interest rates in March moved substantially higher on Wednesday as Treasury yields declined.
According to our projections, the major drivers of high inflation, such as supply chain bottlenecks, shortages, and other disruptions, will further unwind over the next few years, providing prolonged deflationary pressure. In fact, our below-consensus forecast calls for inflation to fall below the Fed’s 2% inflation target in 2025 before beginning to slightly rise back up. Looking forward, we expect further gains will continue to be driven by a widening out of returns across the market. Gains are increasingly spreading out across other areas in the market that had been left behind.
- Technology rallied up to fair value, overshot to the upside, retreated back to fair value, and has bounced back well into overvalued territory.
- Fundstrat’s head of research Tom Lee noted that inflation indicators, like housing prices ,are falling rapidly, suggesting the Fed could soon soften its pace of rate hikes and cause stocks to rally as much as 25% by 2023.
- However, interest rates are pressuring U.S. corporations, increasing the cost of their debt.
- The decision to release several rounds of pandemic stimulus checks and raise unemployment benefits also shows just how willing the US has been to support its people.
- Analyst Kenneth Worthington said in a note to clients on Tuesday that the bitcoin ETFs from BlackRock (IBIT) and Fidelity (FBTC) in particular saw strong inflows on Monday are continuing to lead the way .
Get an email summary of the top stories leading MarketWatch after the U.S. market close. Neither the author nor editor owned positions in the aforementioned investments at the time of publication. On Dec. 13, 2023, the Dow Jones Industrial Average rose about 1.3% and closed at 37,090.24 points — the index’s first record-breaking close in nearly two years. She also advised against trying to time the market based on a presidential election — no matter your opinion of the candidates. This may influence which products we review and write about (and where those products appear on the site), but it in no way affects our recommendations or advice, which are grounded in thousands of hours of research. Our partners cannot pay us to guarantee favorable reviews of their products or services.
It’s about to be a huge week for the stock market as investors confront a wave of economic data and decide whether the ongoing rally to record highs has staying power or not. General Motors shares popped nearly 8% after the automaker posted better-than-expected earnings. Cybersecurity stock F5 gained just shy of 1% on the back of a better-than-expected financial report, while electronics manufacturer Sanmina soared more than 28% after posting strong earnings per share and current-quarter guidance. To top it off, the employment cost index, as well as the ADP payrolls report, showed fresh signs of cooling within the labor market on Wednesday. The data add to market optimism that Federal Reserve could soon cut interest rates, which would further push down yields. We think 2024 will be the first year that both the disruptions from the pandemic and all the subsequent dislocations caused by those disruptions will be behind us.
Zacks Analyst Reports
But other definitions say that a new bull market isn’t underway until an index notches a fresh all-time high. The downstream effects of that decision could have an impact on your portfolio, especially when it comes to renewable energy stocks. “We think the market will hold up and that will be another positive catalyst, because if the market doesn’t go down on bad news, and the market doesn’t go down on bad news and fundamentals, what do you have?” Wilson said. Based on the earnings estimate, Kostin expects the S&P 500 to end 2023 at 4,000, which represents potential upside of just 6% from current levels. Bank of America’s Savita Subramanian is even more bearish than Kostin, as she expects the S&P 500 to generate earnings per share of just $200 in 2023.
In the meantime, all eyes are on the Fed, which is set to deliver its key interest rate decision this afternoon and issue guidance over coming interest rate cuts this year. Despite the challenges, S&P 500 companies reported 4.9% year-over-year earnings growth in the third quarter, with eight out of eleven market sectors reporting positive earnings growth. Rising interest rates increase borrowing costs for both U.S. consumers and corporations, pressuring investment and economic growth.
Analysts polled by LSEG expected a profit of $1.16 per share on revenue of $38.67 billion. Shares of JetBlue were down more than 3% in the premarket even after the airline posted better-than-expected numbers for the fourth quarter. Of these names, 35 companies cinched new all-time highs, including “Magnificent 7” stocks Meta Platforms, Microsoft and Nvidia. With earnings season more than a quarter of the way through for the S&P 500, here’s how companies are faring, according to LSEG data. The IMF forecast economic growth of 3.1% this year, up 0.2 percentage points from its October forecast, due to a resilient U.S. economy and stimulus in China.
Other Steps Stock Market Investors Can Take Now
He also says another thing investors can do in a bear market is to build a robust watchlist of stocks that are displaying relative strength. These are the stocks that aren’t falling as much as the overall stock market or are even eking out a few gains. The watchlist can prepare you to snap up new leaders when the next market uptrend begins.
Biggest Stock Losers
That’s about double the number of cuts Fed officials have forecasted for the year, leaving a lot of room for disappointment. The consumer price index gained 3.1% year-over-year in November, down from peak 2022 inflation levels of 9.1%. The Fed’s battle against inflation has been helped by energy prices, which have fallen on an annual basis for nine consecutive months. “Paul Volcker really had a massive job on his hands and rose the fed funds rate to 20% to kill what at the time was 14% inflation. If that sounds like today, I’m looking at the wrong data,” Hogan said. While this induced a recession, it also tamed inflation and ushered in an unprecedented era of economic growth.
But the first all-time high after a bear market often has special psychological significance for investors because it’s a strong signal that the bad times are behind us, at least for now. “In a recession, we expect S&P https://bigbostrade.com/ 500 EPS would fall by 11%,” Goldman Sachs’ equity strategist David Kostin said in a Friday note. The bank expects the S&P 500 to generate $224 in earnings per share for 2023, down from its prior estimate of $234.
Wall Street is coming off a winning session that brought the Dow and S&P 500 to their sixth record closes of the year. So far, 144 companies have reported quarterly results this earnings season, or about 29% of the index. About 79% of companies that have posted results surpassed Wall Street estimates, compared to an average 76% clip over the past four quarters.
If the country continues to ramp up its exports, it would be a major catalyst for stocks as supply chains ease. “Some of them have been going up for almost 18 months, and just in the last couple of weeks, some had been starting to go almost straight up,” he said. “We are short the discretionary consumer. It’s a high conviction idea,” she said. Federal Reserve Chairman Jerome Powell underlined a newfound resolve to attack inflation as he unveiled a 75 basis point interest rate increase at this month’s Fed meeting. “If you use the S&P as your proxy you cannot mathematically get back to those highs if you don’t get a major participation of technology,” Cronk said. Today’s challenging conditions could grow even worse if the economy falls into a recession, which is now more likely as the Fed moves to raise rates in a more aggressive manner than before.
Wells Fargo Investment Institute’s Cronk told Investor’s Business Daily that the bank’s economists now expect a recession to kick off by the end of the year. Dimon used the most colorful language of all when he pivoted from a cautiously upbeat outlook to predicting “a hurricane” in the space of a few weeks. Wincrest Capital CEO Barbara-Ann Bernard believes investors should be cautious given the Federal Reserve’s move to finally tame inflation. He recommends that you study when you bought stocks, where you sold them and where you took the losses that are inevitable for the active investor. “When it’s hard to make progress in the market, this is a great time to study what you did in the prior market,” Ryan said.
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¹ These are listed in reverse chronological order of when the quotes were published. The quotes don’t necessarily capture the strategists’ entire thesis as they are pulled from reports that are sometimes over a hundred pages long. He predicts the US to see more modest gains, and while he remains bearish on Chinese stocks, he said they should stabilize. Falling Chinese equities have reflected the exodus of foreign investors. Chinese and Hong Kong stocks have shed about $6 trillion in value since 2021, and in 2023, the country’s benchmark indexes have deeply underperformed those of the US and other large economies.
The flagship cryptocurrency is on pace to end the month flat but is heading for a third-quarter loss of 14%. U.S. Treasury yields crept higher Monday, following last week’s Federal Reserve meeting that signaled more hawkish messaging than investors previously expected. The Federal Reserve likely is getting closer to the point where it can keep interest rates steady, though at a higher level than the market is used to seeing, Chicago Fed President Austan Goolsbee said Monday.