Stocks Hit New Highs as S&P 500 Soars
**Market Indexes Surge**
On Friday, the S&P 500 soared to a closing high for the year, extending November’s rally into the new month. The broad market index rose by 0.59%, ending the session at 4,594.63. The tech-heavy Nasdaq Composite advanced 0.55% to 14,305.03, while the Dow Jones Industrial Average added 294.61 points, or 0.82%, to close at 36,245.50.
**Dow Jones Hits New High**
The Dow rose to another new high on Friday, bringing its 2023 gain to nearly 9.4%, after it notched a new 2023 high and capped off its best month in more than a year.
**S&P 500 Closes at Highest Level Since March 2022**
The S&P 500 closed at its highest level since March 2022. Stocks bringing the broad market index to these heights include Ulta Beauty and Boston Properties, which rose 10.8% and 11.2%, respectively. Paramount also had a 9.8% increase.
**Federal Reserve Chair Pushes Back on Rate Cut Expectations**
Federal Reserve Chair Jerome Powell on Friday pushed back against the market’s expectations for interest rate cuts ahead, saying it is “premature to conclude with confidence” that monetary policy is “sufficiently restrictive.”
**Market Interpretation of Powell’s Remarks**
Yields fell as equities rallied during the day, even after Powell’s cautious remarks as traders interpreted them as a signal that the central bank is at least done with hikes. The yield on the 10-year Treasury note fell more than 13 basis points to 4.213%.
**Market Reaction**
Mona Mahajan, senior investment strategist at Edward Jones, stated that “There’s a trifecta of drivers here. The first is the inflation. Second is the Fed seeming like it may be stepping to the sidelines, and then third is this cooling in the economy that is starting to unfold, but at a very gradual pace….It’s almost like a Goldilocks cooling. It’s not too hot. It’s not too cold. And that’s exactly what markets are embracing.”
**Market Expectations on Rate Cuts**
Mahajan added that markets seem to be pricing in rate cuts, but not until the back half of 2024.
**November’s Big Rally and Traders’ Belief in Fed’s Decision**
November’s big rally was due in part to traders beginning to believe the Fed was done raising rates and that the central bank may even start cutting them in the first half of next year. The Fed next decides on rates on Dec. 13.
**Market Gains on November Rally**
Friday’s moves come on the heels of a blowout November rally. November’s gains snapped a three-month losing streak. The S&P 500 and Nasdaq rallied 8.9% and 10.7%, respectively, to notch their best monthly performances since July 2022. The Dow surged 8.8% for its best month since October 2022.
**Market Performance This Week and Upcoming Presidential Election**
This week, the S&P 500 added 0.77%, while the Dow rallied 2.4%. The Nasdaq advanced 0.38%. It marked the fifth consecutive week of gains for the major averages. December is typically a strong month for equities, especially preceding a presidential election.
**Expert’s Opinion**
Bob Doll, chief investment officer at Crossmark Global Investments, stated that “It’s a seasonally strong period. If the market still buys the notion that the Fed has solved the inflation problem and that they’re going to cut rates next year, but that the economy’s gonna be okay and earnings will be fine, then that’s good enough for stocks to go higher.”
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