S&P 500 ekes out meager gains, flirts with bull market confirmation

It was mostly a green day on all the indexes with the Dow up some 120 points until the last 20 minutes when the whole market took a dive with the Nasdaq and S&P ending near break-even and the Dow maintaining a modest 53 point gain. There’s no real explanation given for the sudden last minute plunge but optimism nevertheless prevails. 

“This is one of the best end-of-year rallies we’ve ever seen, a nice reminder of how far we’ve come from the depths of the bear market last year. Reaching new highs after two years could be a subtle sign that economic strength could be in the cards for 2024.”  The odds of a March rate cut are now up to 74.1% and the S&P today is just 13 points shy of its record, which once reached, could get investors off the fence and trigger another major rally.  Being a holiday week and heading into another holiday weekend, volume was quite light at 9.46 billion. 

S&P 500 ekes out meager gains, flirts with bull market confirmation

By Stephen Culp

Thu December 28, 2023 4:34 PM

DJ: 37,656.52  +111.19        NAS: 15,099.18  +24.60        S&P: 4,781.58  +6.83       12/27

DJ: 37,710.10  +53.58          NAS: 15,095.14  -4.04           S&P: 4,783.35  +1.77       12/28

NEW YORK, Dec 28 (Reuters) - The S&P 500 closed nominally higher on Thursday, retracing early gains just before the closing bell on the penultimate trading day of 2023.  The benchmark index concluded the light volume session just 0.3% shy of its record closing high, reached on Jan. 3, 2022.  The blue-chip Dow ended modestly green while the Nasdaq closed a hair lower. All three indexes remained on track for monthly, quarterly, and annual gains.

"This is one of the best end-of-year rallies we've ever seen and a lot of this rally happened before the Fed pivot in the middle of December," said Ryan Detrick, chief market strategist at Carson Group in Omaha.  "It’s a nice reminder of how far we've come from the depths of the bear market last year and reminder to investors that dark clouds happen, but the sun always comes out again," Detrick added.  Had the S&P 500 settled above its previous all-time closing high, it would have confirmed that the benchmark index entered a bull market when it reached the bear market closing trough in October 2022. "Reaching new highs after two years could be a subtle sign that economic strength could be in the cards for 2024," Detrick said.

Data released early in the day, including jobless claims, pending home sales and preliminary trade/inventories all painted a picture of a softening but resilient economy.  This scenario has helped cement bets the U.S. Federal Reserve might cut its policy rate sooner than expected and could pull off a soft landing by avoiding recession.  At last glance, financial markets have priced in a 74.1% probability policymakers will cut the Fed funds target rate by 25 basis points in March, according to CME's FedWatch tool. 

The Dow Jones Industrial Average (.DJI) rose 53.58 points, or 0.14%, to 37,710.1, the S&P 500 (.SPX) gained 1.77 points, or 0.04%, to 4,783.35 and the Nasdaq Composite (.IXIC) dropped 4.04 points, or 0.03%, to 15,095.14.  Among the 11 major sectors of the S&P 500, utilities (.SPLRCU) had the largest percentage gain.

Energy shares (.SPNY) were down the most, weighed by sagging crude prices.  U.S.-listed shares of Chinese companies, including Alibaba Holdings , PDD Holdings (PDD.O) and JD.Com Inc advanced between 0.6% and 2.7% as China's blue-chip stocks staged their biggest jump in five months. CytoSorbents (CTSO.O) slid 33.4% after the company's device aimed at reducing bleeding during surgery failed meet the main goal of a study.  Boeing (BA.N) dipped 0.7% after the planemaker urged airlines to inspect newer 737 MAX airplanes for a possible loose bolt in the rudder control system. 

Declining issues outnumbered advancing ones on the NYSE by a 1.00-to-1 ratio; on Nasdaq, a 1.08-to-1 ratio favored decliners.  The S&P 500 posted 49 new 52-week highs and no new lows; the Nasdaq Composite recorded 141 new highs and 37 new lows.

Volume on U.S. exchanges was 9.46 billion shares, compared with the 12.57 billion average for the full session over the last 20 trading days.