S&P 500 hits new high on strong November rally
Market Rally
The S&P 500 soared to a closing high on Friday, capping off a strong November rally as the broad market index rose by 0.59% and ended the session at 4,594.63. The tech-heavy Nasdaq Composite also advanced by 0.55% to 14,305.03, while the Dow Jones Industrial Average added 294.61 points or 0.82%, closing at 36,245.50.
Market Gains
The Dow surged to another new high, with its 2023 gain reaching nearly 9.4%. The S&P 500 closed at its highest level since March 2022, driven in part by the strong performance of stocks like Ulta Beauty, Boston Properties, and Paramount, which saw increases of 10.8%, 11.2%, and 9.8%, respectively.
Fed Chair’s Comments
Federal Reserve Chair Jerome Powell pushed back against the market’s expectations for interest rate cuts, stating that it is “premature to conclude with confidence” that monetary policy is “sufficiently restrictive.” His comments led to a rally in equities, resulting in a fall in yields. Despite Powell’s cautious remarks, traders interpreted them as a signal that the central bank is at least done with hikes.
Market Reaction
Mona Mahajan, senior investment strategist at Edward Jones, commented on the market’s reaction, saying, “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.” Mahajan added that markets seem to be pricing in rate cuts, but not until the back half of 2024.
November Rally
The big rally in November was partly due 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 S&P and Nasdaq rallied 8.9% and 10.7% respectively, marking their best monthly performances since July 2022. The Dow surged by 8.8% for its best month since October 2022.
Strong Close and Positive Outlook
This week, the S&P 500 added 0.77%, while the Dow rallied 2.4%. The Nasdaq advanced 0.38%, marking the fifth consecutive week of gains for the major averages. Looking ahead, this month is typically a strong one for equities, with Decembers that precede a presidential election generally delivering outsized returns.
Overall, the market seems to be positive about the outlook, as Bob Doll, chief investment officer at Crossmark Global Investments, stated, “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 – and that’s the consensus line at the moment – then that’s good enough for stocks to go higher.”
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