S&P 500 (SPY) Report – 12/18/23

Good morning, traders!

The S&P 500 ($SPY) is trading above Friday’s close. Let’s get into it… 

U.S. stock futures have shown an upward trend, with significant gains marking their seventh consecutive week of growth. This surge in the stock market is highlighted by the S&P 500’s longest streak of weekly gains since 2017, with an overall increase of 3.3% for the month. Similarly, the Dow and Nasdaq have seen rises of 3.8% and 4.1%, respectively. Notably, the Dow reached an intraday record high on Friday, and the Nasdaq-100 achieved a new closing high.

Investor optimism has been bolstered following the Federal Reserve’s announcement of potential short-term interest rate cuts in 2024, in response to slowing inflation. This positive investor sentiment echoes the sentiments of HSBC chief multi-asset strategist Max Kettner, who describes the current market conditions as favorable, likening them to a “Goldilocks” scenario due to slowing inflation, low growth expectations, and sustained growth momentum.

However, Kettner also expresses caution, pointing out that near-term growth and earnings expectations in the U.S. remain weak. He draws a parallel between the current market rally and the 2017-2018 rally, which initially showed bullish sentiment but eventually led to disappointment. Kettner suggests that it may be wise to approach 2024 with a more cautious outlook, especially considering the unpredictability of market volatility.

As the final full trading week of 2023 begins, investors are keenly awaiting economic indicators such as December’s business leaders survey and housing market index results. These indicators will provide further insight into the health of the economy and may influence market trends as the year draws to a close.

Monday Economic Events:
Housing Market Index 10:00am ET

Fed Speaker Scheduled:
Austan Goolsbee 8:30am ET

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