Fed Whispers Fuel Frenzy, but Reality Check Awaits: Housing Market in the Spotlight

Author: William Walsh

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Buzz on Business for Monday, December 18th, 2023

The Dow Jones Industrials finished seven straight weeks of gains on Friday. The rally, which began on October 30th, has seen the Dow climb from 32,537 to 37,305, a gain of 14% in less than two months. And given third-quarter earnings, retail sales, consumer sentiment, inflation, and the Fed, is there any reason for it to stop here?

Stock Market Report

  • The Dow Jones Industrial closed out the week last week at 37,305, a new all-time high. They were up 57 points, almost two-tenths of a percent.
  • The S+P 500 had a weird day. One I’m not sure I’ve seen before. It bounced around in a tight range, mostly lower, throughout the day, as is often the case. It rallied with a half hour left in the session, but the rally faded and closed down 0.36 points.
    Here at Financial Animal, we round to the nearest whole number and were tempted to say the S+P finished flat on the day, but that wouldn’t be accurate because of rounding. We reported that on Thursday, the S+P closed at 4,720. Well, on Friday, it closed at 4,719. We leave it to our readers to figure all of that out.
  • The Nasdaq Composite presented no such challenges. It was up 52 points. That’s four-tenths of a percent, and closed at 14,814
  • The XRT Retailers gave back a bit of their Thursday gains. They closed down eight-tenths of a percent at $70.85, off fifty-eight cents.

Bonds Were Mixed

  • The two-year Treasury closed yielding 4.449%. That’s up five basis points.
  • The yield on the twenty-year was off three ticks, and it closed the week with a yield of 4.195%

Oil and Gold

  • Gold was off $9.20 and closed at $2,035.70
  • Oil finished the week at $71.74, a gain of a minuscule fifteen cents.

FOMC Meeting Powers the Markets: More Data Due This Week

Obviously, the big story of the week just past was the Fed and its ever-so-subtle change in policy, which sent the markets racing skyward. We must say that the change was so subtle as to be non-existent. There’s part of us here at World Headquarters who believe stocks were ready to go up and were just looking for an excuse.

There’s a lot of potentially market-moving economic data due out this week. A bunch of housing data early in the week and the carefully watched PCE Index—the Fed’s preferred inflation indicator comes out on Friday.

The market’s recent rally may have legs, fueled by whispers of dovish pivots and end-of-year optimism. But economic data this week, particularly the PCE, could throw cold water on the party. Investors would be wise to buckle down, brace for potential volatility, and keep it right here!

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