The S&P 500 (Index: SPX) rose for the seventh week in a row. The index closed out the week at 4719.19, almost a 2.5% increase over where it closed the previous week.Almost all of that upward movement came on Wednesday, 13 December 2023 after 2:00 PM, when the Federal Reserve first announced it would hold the Federal Funds Rate steady in a target range of 5.25 to 5.50%, then signaled in the following press conference by Federal Reserve Chair Jerome Powell that the U.S. central bank would pivot to cut interest rates in 2024. The change effectively reverses the expectation the Fed would continue following a more hawkish policy that had been voiced by Powell as recently as 1 December 2023.After the bulls were let loose on Wednesday, the S&P drifted slightly higher through the rest of the week as Fed officials sought to walk back some of the change in expectations for the course of how interest rates would change during 2024 they had unleashed.These changes are captured in the latest update of the alternative futures chart. We’ve also added a new redzone forecast range to account for the echoes of past volatility that arises from the dividend futures-based model’s use of historic stock prices as the base reference points from which it projects the potential trajecgtories of the S&P 500 into the future.latest updateThis new redzone forecast range assumes investors will shift their forward-looking focus from 2024-Q4, where we established it was in the previous edition of the S&P 500 chaos series, back toward 2024-Q1, which coincides with the expected timing of when investors anticipate the Fed will start cutting interest rates.That change in the forward time horizon of investors wasn’t the only expectation that changed during the past two weeks. The outlook for dividends has also substantially improved during the past month, as shown in the next chart.next chartNearly all of the change in the outlook for dividends in 2024 took place during the past two weeks.Other things also happened during the trading week ending on Friday, 15 December 2023. Here is our summary of the week’s market moving headlines.Monday, 11 December 2023
- Oil settles slightly higher, investors still wary
- Global trade to contract by 5% in 2023, UN body says
- Sharp Fed liquidity drain hints at early end for balance sheet runoff
- US public’s downbeat view of economy is real, Chicago Fed research shows
- China’s leaders meet to discuss growth targets for 2024, say sources
- China’s consumer prices fall fastest in 3 years, factory-gate deflation deepens
- Yen falls as Japan’s negative rates expected to persist
Tuesday, 12 December 2023
- Oil holds soft tone on oversupply concerns, markets await Fed
- Stubbornly high rental costs lift US consumer inflation in November
- China’s Country Garden may avoid yuan bond default after deal – Bloomberg News
- China says it will step up policy adjustments to spur recovery in 2024
- BOJ wants markets ready for a policy shift – just not so soon
Wednesday, 13 December 2023
- Oil holds soft tone on oversupply concerns, markets await Fed
- US bankruptcy wave may stretch into 2024, but pace could slow
- Fed likely to hold rates steady, signal couple of cuts in 2024
-
pivot
- Fed likely to hold rates steady, signal couple of cuts in 2024
- US rate futures lift March rate cut bets after Fed flags end of tightening
- Fed ‘Dots’ Signal Major Dovish Pivot For Election Year
- Fed’s Powell not ready to say when balance sheet wind-down ends
- China Nov bank loans rise less than expected, more easing expected
- Japan’s central bank to sit tight on policy, may drop hints on pivot
- Euro zone industry output falls by more than expected in October
- Dow ends at record high as Fed signals lower borrowing costs in 2024
- Apple reaches record high close as Fed signals rate cuts
Thursday, 14 December 2023
-
Oil rises 3% on IEA demand upgrade, weaker dollar
- World oil demand next year to rise faster than expected, IEA says
- US economy still resilient as retail sales beat expectations, layoffs stay low
- US mortgage rates fall below 7% for first time since August
- Fed seen pivoting to interest rate cuts in March, perhaps earlier
- Fed rarely cuts rates at a ‘measured pace’
- China’s c.bank set to boost liquidity injection but keep key rate unchanged
- Japan’s political scandal may clear path for easy policy exit
-
ECB resists rate cut bets with pledge to stay tight
- ECB resists rate cut bets with pledge to stay tight
- Fed stands alone as ECB, BoE stick with tight policy
- Dow scores second record close in a row on lower-rate bets
Friday, 15 December 2023
- Oil prices take a small loss in seesaw session
- CBO projects 1.5% U.S. GDP growth in 2024, 4.4% jobless rate
- US PMIs Suggest “Weak GDP Growth” In Q4, Prices Remain “Elevated”
- Fed’s Williams douses Wall Street’s rate-cut speculation
- Exclusive: Fed’s Bostic sees two rate cuts, soft landing next year
- China’s weak property sector, retail sales keep stimulus calls alive
- German economic activity deteriorates in Dec-PMI
- S&P 500 posts longest weekly winning streak since 2017; finishes flat on day
- US bank stocks drop as Fed policymaker plays down rate-cut expectations
The CME Group’s FedWatch Tool projects the Fed will hold the Federal Funds Rate steady in a target range of 5.25-5.50% until 20 March 2023 (2024-Q1), six weeks earlier than expected a week ago, when the Fed is expected to start a series of quarter point rate cuts at six-to-twelve-week intervals through the end of 2024.The Atlanta Fed’s GDPNow tool’s estimate of real GDP growth for the current quarter of 2023-Q4 rose to an annualized growth rate of 2.6% after having held steady at a +1.2% growth rate during the preceding two weeks. The Atlanta Fed’s nowcast increased thanks to reports of higher personal and government spending figures along with higher business investments in the past week.This article is the last for the S&P 500 chaos series in 2023. We’ll be back with a new edition covering the last weeks of December 2023 sometime early in 2024!More By This Author:U.S.-China Trade Recession Shows Signs Of BottomingUS Recession Odds Recede To Two Out Of Three Chance In 2024 Investors Shift Time Horizon To More Distant Future
Leave A Comment