On Friday, the last piece of economic data that the investors were keeping an eye open for, the Chicago PMI for December, plummeted to 46.9, from 55.8 in November, marking the largest monthly drop in over two years. The latest reading widely misses the consensus estimate of 50.0 for the period and drops the index back into contraction territory.

This only adds momentum to what the investors have now known for months, that the Fed policy tightening has had the desired effect on the markets and now rate cuts might be on the horizon. Wall Street whimpered off on the last two trading days in 2023 as traders booked profits in what has otherwise been a blockbuster December to cap-off the year.

Further tests of the market's strength will quickly follow suit as companies start to report fourth-quarter results in the next couple of weeks. Market participants are also awaiting the message from the Fed at the conclusion of its first monetary policy meeting of the year slated for late January.

Despite a remarkable turnaround, 2023 had its challenges. The regional banking crisis of March, the political standoff in the halls of the U.S. Congress, oil supply concerns arising from the situation in the Middle-East and recession fears, all took their turns to keep the markets jittery. However, an artificial intelligence induced technology boom and the Fed’s policies finally taking effect to bring the inflation down have ensured that 2023 ends big and on a high note. Investors are currently anticipating rate-cuts as early as March. Even as global macro-economic factors continue to have a bearing, 2024 may already have a solid base to flourish from.