Topline
The S&P 500 closed at a new high for the year Friday, with investors taking a long-awaited sigh of relief as the Federal Reserve has cut back its aggressive interest rate hiking campaign amid a late fall rally on Wall Street that reversed a stubborn summer slump.
Federal Reserve Chair Jerome Powell said it is too early to declare the Fed’s war against inflation … [+]
Key Facts
The S&P 500 rose 0.59% on the day to a 2023 high of 4,594, following a steady rise on Wall Street that saw the S&P 500 climb 9% over the month of November, while the tech-heavy Nasdaq rose 6% and the Dow Jones Industrial Average climbed 11% last month.
The rise in the stock market comes as major companies including Amazon, Disney and Apple report strong profit growth, with more than four-fifths of companies on the S&P 500 beating analyst expectations over the third quarter, fueling the S&P’s biggest monthly gain last month since July 2022.
The index’s strong performance also comes as the Federal Reserve has held interest rates steady following a historic string of rate hikes, as the labor market grows and inflation cools, with core inflation—a measure that excludes food and fuel—hitting a two-year low last month.
This is the highest the index has closed since it was at 4,602 on March 30, 2022.
What We Don’t Know
Whether the rise will continue into next year, and whether Wall Street will recover to 2022 highs. Goldman Sachs analysts last month predicted the S&P 500 would reach 4,700 by the end of next year, just below its record high, while Morgan Stanley analyst Michael Wilson tapered his expectation, forecasting a target of 4,500 by the end of next year.
News Peg
Despite improving market conditions, Federal Reserve Chairman Jerome Powell cautioned at a Spelman College press conference on Friday it is “premature” to say whether the central bank’s efforts to combat inflation have ended, and whether the Fed will roll back the interest rate hikes it conducted over the past year. Powell’s comments come as 10-year U.S. Treasury yields hit a three-month low of just under 4.3%.
Tangent
In a meeting last month, the Fed decided to keep the target federal funds rate flat, at 5.25% to 5.5%, though interest rates still remain at their highest point in more than 20 years. The Fed did not rule out the possibility of further rate increases at that meeting, saying it would evaluate the “extent of additional policy firming.”
Further Reading
Here’s Where Wall Street Says S&P 500 Will Head Next Year (Don’t Expect Record Highs) (Forbes)
S&P 500 Set For Best Month Of 2023 As Market Gives Thanks To Strong Earnings, More Forgiving Fed (Forbes)
Source: https://www.forbes.com/sites/brianbushard/2023/12/01/sp-500-sets-2023-high-reversing-summer-slump/