S&P 500 Shines: Clocks Longest Weekly Winning Streak in Six Years

U.S. stock markets capped off their seventh consecutive week of gains as they closed mostly higher on Friday, following the Federal Reserve’s policy meeting. According to Dow Jones Market Data, the S&P 500 achieved its lengthiest weekly winning streak since November 2017.

Breaking down the performance of key indices on Friday:

• The Dow Jones Industrial Average (DJIA) gained 56.81 points, or 0.2%, setting a record close at 37,305.16.
• The S&P 500 (SPX) remained nearly flat, slipping less than 0.1%, and closed at 4,719.19.
• The Nasdaq Composite (COMP) rose by 52.36 points, or 0.4%, concluding at 14,813.92.

The week witnessed a broad market rally fueled by positive responses to crucial U.S. inflation data, the Federal Reserve’s policy statement, and interest rate projections. The Dow, S&P 500, and Nasdaq Composite all secured a seventh straight week of gains.

Russell Price, Chief Economist at Ameriprise Financial, expressed confidence in the market’s optimistic tone, attributing recent positive trends to potential rate cuts by the Federal Reserve in 2024, supported by declining 10-year Treasury yields.

Price predicted a potential start to rate cuts in June, leading to sustainable economic growth in 2024, with a projected real GDP increase of 1.8% to 1.9% next year. The majority of S&P 500 sectors saw gains, with small-cap stocks, represented by the Russell 2000 index, outperforming large-cap equities with a weekly gain of approximately 5.6%.

While Federal Reserve Chair Jerome Powell hinted at a favorable trajectory for inflation and possible lower rates in the coming year, caution emerged as traders appeared overly optimistic about rate cuts. Federal-funds futures suggested a potential rate reduction starting as early as March, according to the CME FedWatch Tool.

Friday’s trading session encountered a brief setback after New York Federal Reserve Bank President John Williams downplayed expectations of imminent rate cuts, stating, “We aren’t really talking about cutting interest rates right now.”

In terms of economic indicators, the consumer-price index showed a year-over-year inflation rate of 3.1% in November, a notable decrease from the peak of 9.1% in June. Powell emphasized the Fed’s commitment to its 2% inflation target.

Mark Hackett, Chief of Investment Research at Nationwide, interpreted Powell’s statements as signaling a soft landing without the need for a recession. Economic data from Friday highlighted challenges in U.S. manufacturing, while the 10-year Treasury yield experienced its largest weekly drop since November 2022.

Despite Friday’s flat close, the S&P 500 remained just 1.6% below its record close on January 3, 2022, reflecting the market’s robust momentum. Companies in focus included Palantir Technologies Inc., Steel Dynamics Inc., Costco Wholesale Corp., JD.com, and Alibaba Group Holding Ltd., each experiencing notable stock movements based on various news and earnings reports.