Buzz on Business for December 14, 2023

Yesterday afternoon, we observed in astonishment as both stocks and bonds surged.

Stock Market Report

• The Dow Jones Industrial soared to a new closing high on Wednesday. It was up 512 points, 1.4%, and closed at 37,090.
• The S+P 500 closed at 4707, which is not an all-time high. That’s 4819, but it’s close, just 112 points away and higher than it’s been since January of last year. It gained 63 points or 1.37%.
• The Nasdaq Composite was also up 1.4%, that’s 201 points and it closed at 14,734.
• The XRT Retailers had been down all day but came to life at 2:00 pm ET. They ended the day with a gain of 3.3% and closed at 69.75, up 2.22.

Bond Markets

Bonds experienced a sharp rise, with stocks increasing by 1.5%. Such a significant change in bond yields is rare.

• The yield on the two-year Treasury was down an extraordinary thirty basis points. It now yields 4.433%
• The yield on the twenty-year was off fourteen ticks, and it closed at 4.336%

Oil and Gold

• Oil had a lower-low and a higher close. That’s known as a bullish reversal and often means prices are headed higher. It was up $1.13 and closed at $69.81
• Gold rallied on the news. It was up $50  and now changes hands at $2,043 a troy ounce.

Inflation Numbers Below Expectations

The Producer Price Index came in below expectations yesterday morning. This contrasts with the Consumer Price Index, which exceeded expectations by just a tick on Tuesday. Inflation at the wholesale level was 0.0% in November versus expectations of an increase of 0.1%. The core number was also 0.0% in November versus expectations of 0.2%.

These are good numbers indeed and well within the Fed’s target of a two percent annual inflation rate.

Fed Turns Toward Easing

Which brings us to the next story. The Federal Open Market Committee finished its final meeting of 2023 at 2:00 pm ET yesterday. The Fed did not change policy. The Fed Funds rate remains at 5.5%, where it has been since June.

But the Fed subtly changed its outlook for next year. The Fed has, for the longest time, predicted rate cuts next year. It’s statement yesterday removed some qualifiers and, perhaps, was a bit more explicit about its plans. Either way, it looks like the long-awaited rate cuts are now on the horizon, and that was all traders needed to send stocks and bonds higher.