December 30, 2023

The U.S. stock market extended its winning streak through the end of trading for 2023.  The S&P 500 Index rose 0.3% in the final week of the year, marking the ninth straight weekly advance – the longest run of consecutive gains since 2004. 

The S&P is close to its all-time high (set in January 2022), but has yet to take out that peak.  Investors will be keenly watching to see if the recent bullish momentum rolls into the New Year and lifts the market to new heights.

Meanwhile, the U.S. bond market is having an end-of-year party of its own as Treasury yields continued to ease and prices rise (bond prices and yields move inversely).  The 10-year Note’s current yield fell again in the final week of 2023 trading, closing at 3.88%, the lowest weekly level since mid-July – and far below the near-5% mark that was briefly touched in October.

Optimism that the Federal Reserve will start cutting its benchmark interest rate soon and that the economy will avoid a recession has driven stocks higher over the last two months, with the Nasdaq 100 Index, the S&P 500, and the Dow Jones Industrial Average all posting double digit gains for 2023. 

Not surprisingly, analysts differ significantly on what the stock market’s strong gains in 2023 portends for U.S. stocks in 2024.

Market technicians (who utilize price trends and patterns as revealed charts) interpret the latest run of buying as a signal that the stock market is about to break free of the trading range that has shackled it for the past two years.

Fundamental analysts (who focus on financial data and economic indicators to assess the market’s intrinsic value) see the near-record high for the S&P 500 as a sign that stocks are over-valued and, as a result, a market correction is near. 

I’m not inclined to pick a side in this debate.  Instead, I prefer a systematic approach that uses a combination of technical and fundamental indicators in an effort to decrease risk and boost returns.   That perspective leads me to have a modest bias towards equities as the New Year approaches.

That’s all for now.  Have a great weekend and invest wisely my friends.