The main US stock indexes closed mostly in the red on Friday (15th), with the Dow Jones hitting record highs for three consecutive days. After investors digested this week’s Federal Reserve (Fed) policy meeting and inflation data, major indexes rose for a seventh consecutive week, with the S&P 500 recording its longest winning streak in six years.
The Dow Jones Index rose about 2.9% this week, the S&P 500 Index rose 2.5%, and the Nasdaq Composite Index rose nearly 2.9% Among them, the S&P 500 weekly line set a record for the longest consecutive rise since September 2017.
The Federal Reserve admitted on Wednesday (13th) that its efforts to curb inflation are paying off, suggesting it will cut interest rates at least three times in 2024. The news boosted investor sentiment and drove US stocks higher for the week this. In addition, following data showing that inflation has cooled, November retail sales released on Thursday (14th) were better than expected, raising hopes that the Federal Reserve could achieve a soft landing.
Nevertheless, New York Fed President John Williams said in an interview on Friday that cutting interest rates is not a topic that is currently being discussed by the central bank. “We are not really talking about cutting interest rates at the moment. We are very concerned about the issue at hand, as Chairman Ball said, is monetary policy reaching a sufficiently restrictive stance to ensure that inflation returns to r target of 2%? That’s a question for us. The problem at hand.”
Investors continue to assess the impact of the Federal Reserve’s recent policy changes. The 30-year US Treasury yield fell below 4% on Friday to its lowest level since July. The 10-year US Treasury yield fell 31.7 basis points this week to 3.913%, the biggest weekly drop since November last year.
The US Congressional Budget Office (CBO) released its latest semi-annual forecast, which shows that as economic growth and labor market activity cool, US inflation is expected to slow, and the price expenditure index is expected to personal consumption (PCE) decreased to 2.1 in 2024. %, and 2.2% in 2025. Core PCE, which excludes energy and food costs, is expected to slow to 2.4% and decrease to 2.3% in 2025.
The CBO’s inflation forecast is more optimistic than the Fed’s. According to the Summary of Economic Outlook (SEP) released by the Federal Reserve this week, the Fed predicts that PCE will decline to 2.4% in 2024 and 2.1% in 2025.
In terms of economic data, the latest survey by the Federal Reserve Bank of New York showed that the New York manufacturing index fell to -14.5 in December, a four-month low, reflecting that the manufacturing industry remains in trouble. The S&P Purchasing Managers’ Index (PMI) also showed weakness in the US manufacturing sector, while service sector activity rose to a five-month high.
Performance of major US stock indices on Friday (15th):
- The Dow Jones Industrial Average rose 56.81 points, or 0.15%, to close at 37,305.16 points.
- The S&P 500 fell 0.36 points, or -0.01%, to close at 4,719.19 points.
- The Nasdaq Composite Index rose 52.36 points, or 0.35%, to close at 14,813.92 points.
- The Philadelphia Semiconductor Index rose 19.53 points, or 0.48%, to close at 4,117.00 points.
- The NYSE FANG index rose +63.85 points, or 0.75%, to close at 8,611.57 points.
Of the 11 major sectors of the S&P 500, only technology, communications and consumer discretionary stocks ended in the red, with utilities and real estate stocks falling the most. (Photo: Finviz) Focus Stocks
Among the five tech kings in the NYSE FANG+ index, only Apple closed in the red. Apple (AAPL-US) fell 0.27%; Meta Platforms (META-US) rose 0.53%; Alphabet (GOOGL-US) rose 0.50%; Amazon (AMZN-US) rose 1.73%; Microsoft (MSFT-US) rose 1.31% .
Dow Jones stocks were mixed. Boeing (BA-US) rose 3.13%; Intel (INTC-US) rose 2.17%; Salesforce ( CRM ) rose 1.71%; Cisco (CSCO-US) rose 0.87%; JPMorgan Chase (JPM-US) rose 0.76%; Verizon (VZ-US) fell 1.32%; Johnson & Johnson (JNJ-US) fell 1.09%.
Feiban stocks were mixed. Intel (INTC-US) rose 2.17%; Broadcom (AVGO-US) rose 2.10%; Qualcomm (QCOM-US) rose 1.15%; NVDA (NVDA-US) rose 1.12%; Advanced Micro Devices (AMD-US)) rose 0.83 %; Colin R&D (LRCX-US) rose 0.82%; Micron (MU-US) fell 0.95%; TSMC ADR (TSM-US) fell 0.88%.
Taiwan stock ADR has expired. TSMC ADR (TSM-US) fell 0.88%; ASE ADR (ASX-US) fell 0.44%; UMC ADR (UMC-US) fell 0.49%; Chunghwa Telecom ADR (CHT-US) fell 0.98%.
Corporate News
Intel (INTC-US) closed up 2.17%. Analysts at Bank of America (BofA) raised their rating on the stock to “Neutral” from “Underperform” and raised their target price to $50 per share from $32. The chip maker launched Core Ultra laptop processors on Thursday to aggressively tap into the AI market.
Tesla ( TSLA-US ) closed up 0.98% on Friday after analysts at Guggenheim raised the price target for Tesla to $132 a share from $125.
Costco (COST-US) closed up 4.45%. The mass merchandiser announced its final quarter financial results after the market closed on Thursday, with better-than-expected revenue and profit, and declared a dividend of $15 per share.
JD.com ADR (JD-US) closed 4.46% higher, while Alibaba ADR (BABA-US) rose 2.76%. Both Chinese technology companies have been boosted by the prospect of further stimulus measures from the Chinese government to boost the economy.
Economic data
- The New York Fed manufacturing index in December was -14.5, expected 4, and the previous value was 9.1
- US industrial production increased 0.2% in November, expected to be 0.3%, and the previous value was -0.6%
- The US capacity utilization rate in November was reported at 78.8%, which was expected to be 79.1% and the previous value was 78.7%.
- The preliminary value of the S&P Services PMI in the United States in December was 51.3, which was expected to be 50.7, and the previous value was 50.8.
- The preliminary value of the S&P Manufacturing PMI in the US in December was 48.2, compared to the expected 49.5, and the previous value of 49.4
Wall Street Analysis
Russell Price, chief economist at Ameriprise Financial, believes it is reasonable for US stocks to digest expectations that the Fed will cut interest rates in 2024. The recent drop in US 10-year bond yields will help boost the stock market. He predicts that the Fed could start cutting interest rates from June, and the US economy will slow to a “sustainable” growth rate next year, with the growth rate likely to fall between 1.8% and 1.9% .
CME Group’s FedWatch tool shows that traders of federal funds futures expect the Fed to start cutting interest rates as early as March. Price said traders’ bets on rate cuts appeared to be “too far ahead.”
Chris Larkin, managing director of trading and investing at E-Commerce, said: “Wednesday’s Fed meeting gave a big boost to stock market sentiment, but the immediate impact is bound to fade. No matter how strong the trend, it’s not stocks are rising every day, corrections and pauses are inevitable.”
Tom Essaye, founder of The Sevens Report, said: “The S&P 500 is up at least 10% in less than two months, so the market has to price in some rebound. This can happen in the short term, especially if the Fed Officials are expected to make comments over the next week or two that could dampen the market’s enthusiasm.”
All figures are updated before the closing date, please refer to the actual quote.
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