The stock market showed signs of strength on Wednesday as the latest round of encouraging economic data bolstered investor sentiment heading into the end of the year. The S&P 500 experienced a slight rise, gaining 0.11%, while the Dow saw a modest increase of 9 points, equivalent to 0.03%. The Nasdaq Composite outperformed the other indexes, rising 0.35%.
Alphabet Surpasses Expectations
Google-parent company, Alphabet, stood out as the best performer in the S&P 500, with a gain of over 3% and hitting a new 52-week high. Other tech stocks, such as Meta Platforms and Tesla, also experienced positive movement, with gains of 1% and 0.5% respectively.
Unfortunately, not all stocks fared well. FedEx, a package delivery giant, faced a significant setback as it issued a disappointing revenue outlook for the fiscal year. This news, coupled with fiscal second-quarter results that fell short of expectations, caused their stock to plummet over 11%.
Consumer Confidence Soars
Despite this setback, the December consumer confidence index provided a glimmer of hope for investors. The index rose to 110.7, surpassing economists’ expectations of 104.5. This positive news further contributed to the overall upward trend in the stock market.
During regular trading on Tuesday, stocks rose broadly, with the S&P 500 gaining 0.59% and inching closer to its record close and intraday high achieved in January 2022. The Nasdaq Composite crossed the 15,000 threshold for the first time since January 2022, recording a 0.66% increase. The Dow also performed well, advancing by 0.68% and closing at a new record high. These gains resulted in the ninth consecutive winning day for both the Nasdaq and the Dow.
Looking Ahead to 2024
As December and 2023 come to an end, all three major averages are headed for a successful year. The recent rally in the stock market, along with the anticipation of proposed rate cuts from the Federal Reserve in the new year, has allowed for continued growth. The S&P 500 has demonstrated a 4.4% increase this month and a 24.2% increase year-to-date, while the Dow has experienced gains of 4.5% and 13.3% respectively. The Nasdaq has had a remarkable year, with a 5.5% increase in December and an impressive 43.4% increase for the entire year, marking its best performance since 2020.
Caution Amidst Optimism
Despite the positive market conditions, Kevin Gordon, a senior investment strategist at Charles Schwab, advises caution. He points out that while the market may appear strong, there is a need to be vigilant. Gordon warns against overexuberance, stating that a short-term pullback in the market would not be surprising given the current frothy sentiment. He believes that although there is a stealthy rotation under the surface that could continue in 2024, investors should be mindful of the potential risks.
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