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Wall Street ended higher on Monday to open the week. Markets continued to rally on rate-cut expectations despite more Fed officials turning hawkish. Two of the three major stock indexes ended in the green while one remained flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually flat to close at 37,306.02. Nineteen components of the 30-stock index ended in positive territory, while 11 ended in negative.
The tech-heavy Nasdaq Composite gained 0.6%, or 90.89 points, to close at 14,904.81.
The S&P 500 rose 0.5%, or 21.37 points, to close at 4,740.56. Seven out of the 11 broad sectors of the benchmark index closed in the red. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU) and the Industrials Select Sector SPDR (XLI) retracted 1.3%, 1.2% and 0.6%, respectively, while the Communication Services Select Sector SPDR (XLC) advanced 1%.
The fear-gauge CBOE Volatility Index (VIX) increased 2.3% to 12.56. A total of 11.8 billion shares were traded on Monday, lower than the last 20-session average of 11.9 billion. Advancers outnumbered decliners on the NYSE by a 1.12-to-1 ratio. On the Nasdaq, declining issues led advancing ones by 1.15-to-1.
Wall Street continues to ride on the rate-cut rally that has seen it close out seven consecutive winning weeks. Market participants remain hopeful that there will be multiple rate cuts in 2024 starting in March, even as they keep a cautious watch on crucial data coming in this week.
Fed officials, however, in recent sessions, have started to make comments suggesting that the markets are probably getting ahead of themselves. Per the Fed December meeting, there are only three rate cuts planned in 2024, while investors are anticipating at least five or six. Investors, nonetheless, continue to disregard these suggestions as of now and are betting on the rate hike regime ending and a probable string of cuts.
"It's not what you say or what the Fed Chair says, it's what do they hear and what do they want to hear?" Chicago Fed president Austan Goolsbee said in an interview in reference to how the financial markets have responded to Fed Chair Jerome Powell's comments last week, where he pondered that rate cuts were beginning to come into view. He went on to say that the Fed is not making a precommitment to cut interest rates soon and swiftly, and the soaring market expectations are at odds with how the central bank functions.
Another important official, Cleveland president Loretta Mester, said that the markets had gone a little bit ahead of themselves on the topic of when to expect the rate cuts. "The next phase is not when to reduce rates, even though that's where the markets are at. It's about how long do we need monetary policy to remain restrictive in order to be assured that inflation is on that sustainable and timely path back to 2%," Mester told the FT in an interview.
However, it is increasingly becoming clear that market punters are paying little heed to these comments and are still clinging to what Powell suggested at the conclusion of the Fed December meeting. Even as the Dow closed a flat session, the two other benchmark indexes made considerable gains, led by growth stocks like tech and communications.
Image: Bigstock
Stock Market News for Dec 19, 2023
Wall Street ended higher on Monday to open the week. Markets continued to rally on rate-cut expectations despite more Fed officials turning hawkish. Two of the three major stock indexes ended in the green while one remained flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) remained virtually flat to close at 37,306.02. Nineteen components of the 30-stock index ended in positive territory, while 11 ended in negative.
The tech-heavy Nasdaq Composite gained 0.6%, or 90.89 points, to close at 14,904.81.
The S&P 500 rose 0.5%, or 21.37 points, to close at 4,740.56. Seven out of the 11 broad sectors of the benchmark index closed in the red. The Real Estate Select Sector SPDR (XLRE), the Utilities Select Sector SPDR (XLU) and the Industrials Select Sector SPDR (XLI) retracted 1.3%, 1.2% and 0.6%, respectively, while the Communication Services Select Sector SPDR (XLC) advanced 1%.
The fear-gauge CBOE Volatility Index (VIX) increased 2.3% to 12.56. A total of 11.8 billion shares were traded on Monday, lower than the last 20-session average of 11.9 billion. Advancers outnumbered decliners on the NYSE by a 1.12-to-1 ratio. On the Nasdaq, declining issues led advancing ones by 1.15-to-1.
Investors Remain Upbeat Despite Hawkish Fed Officials
Wall Street continues to ride on the rate-cut rally that has seen it close out seven consecutive winning weeks. Market participants remain hopeful that there will be multiple rate cuts in 2024 starting in March, even as they keep a cautious watch on crucial data coming in this week.
Fed officials, however, in recent sessions, have started to make comments suggesting that the markets are probably getting ahead of themselves. Per the Fed December meeting, there are only three rate cuts planned in 2024, while investors are anticipating at least five or six. Investors, nonetheless, continue to disregard these suggestions as of now and are betting on the rate hike regime ending and a probable string of cuts.
"It's not what you say or what the Fed Chair says, it's what do they hear and what do they want to hear?" Chicago Fed president Austan Goolsbee said in an interview in reference to how the financial markets have responded to Fed Chair Jerome Powell's comments last week, where he pondered that rate cuts were beginning to come into view. He went on to say that the Fed is not making a precommitment to cut interest rates soon and swiftly, and the soaring market expectations are at odds with how the central bank functions.
Another important official, Cleveland president Loretta Mester, said that the markets had gone a little bit ahead of themselves on the topic of when to expect the rate cuts. "The next phase is not when to reduce rates, even though that's where the markets are at. It's about how long do we need monetary policy to remain restrictive in order to be assured that inflation is on that sustainable and timely path back to 2%," Mester told the FT in an interview.
However, it is increasingly becoming clear that market punters are paying little heed to these comments and are still clinging to what Powell suggested at the conclusion of the Fed December meeting. Even as the Dow closed a flat session, the two other benchmark indexes made considerable gains, led by growth stocks like tech and communications.
Consequently, shares of Netflix, Inc. (NFLX - Free Report) and Meta Platforms, Inc. (META - Free Report) jumped 3% and 2.9%, respectively. Meta carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
No economic data was released on Monday.