Good morning, traders!
The S&P 500 ($SPY) is trading below yesterday’s close. Let’s get into it…
U.S. stock futures pull back this morning, after the Dow Jones Industrial Average hit all-time highs. This trend reflects a broader bullish momentum in the stock market, with major averages like the Dow and S&P 500 experiencing their longest streaks of weekly gains since 2017 and 2019, respectively.
Significant changes are happening in the composition of major stock indexes. The S&P 500 and Nasdaq-100 are undergoing their quarterly rebalances, which will see companies like Uber joining the S&P 500 and DoorDash and MongoDB being added to the Nasdaq-100. This rebalancing could lead to volatility in trading, with concerns about some stocks potentially gaining disproportionate weight in these indexes.
The S&P 500 is approaching an all-time high, now less than 1.6% away from its record close set in January 2022. The Nasdaq is also not far behind, at about 8% away from its highest-ever close. This bullish market trend is bolstered by the Federal Reserve’s recent indications of interest rate cuts in 2024, along with strong retail sales data and signs of inflation easing. These factors contribute to investor optimism and the potential for a stable economic trajectory.
The market’s positive outlook is further reinforced by recent comments from Anastasia Amoroso, the chief investment strategist at iCapital. She highlighted the Federal Reserve’s focus on reducing inflation, which has been declining significantly. With inflation potentially reaching 2.7% by March and interest rates at 5.5%, there’s a notable gap that the Fed could address by cutting rates. Additionally, Treasury yields have decreased this week, with the 10-year yield falling below 4% after peaking at over 5% in October, indicating a shift in investor sentiment and economic expectations.
Friday Economic Events:
Empire State Mfg Index 8:30am ET
Industrial Production 9:15am ET
PMI Composite Flash 9:45am ET – High Volatility Expected
Baker Hughes Rig Count 1:00pm ET\
Fed Speaker Scheduled:
No Fed Speakers Scheduled
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