S&P Squeezes Out Tiny Gains, Hinting at Fragile Bullish Recovery

On the last trading day of 2023, the S&P 500 retraced its early gains and settled marginally higher on Thursday.

Just 0.3% separated the benchmark index at the end of the low volume session from its all-time closing high, which was attained on January 3, 2022.

The Nasdaq finished slightly down, while the blue-chip Dow finished slightly higher and reached its second consecutive record-high closing level. It was still expected that all three indices would rise monthly, quarterly, and annually.

Ryan Detrick, Chief Market Strategist at Carson Group in Omaha, described the current end-of-year rally as one of the most impressive, noting that a substantial portion of the rally occurred before the Federal Reserve's pivot in mid-December. Detrick emphasized the rally's significance as a reminder of the remarkable recovery from the depths of the bear market experienced last year.

He sees it as an assurance to investors that despite occasional challenges, akin to dark clouds, the sun inevitably emerges again. Detrick's perspective reflects optimism and underscores the resilience of the market in overcoming adversities.

When the benchmark index hit the closing low of the bear market in October 2022, it would have been proven that a bull market had begun if the S&P 500 had closed above its previous all-time closing high.

"Reaching new highs after two years could be a subtle sign that economic strength could be in the cards for 2024," Detrick stated.

A picture of a slowing but resilient economy was presented by data released early in the day, including unemployment claims, pending home sales, and preliminary trade/inventory data.

This situation has strengthened U.S. wagers. In order to avert a recession, the Federal Reserve may lower its policy rate earlier than anticipated and accomplish a gentle landing.

Market Insights and Highlights

Based on CME's FedWatch tool, financial markets have priced in a 74.1% chance that policymakers would reduce the Fed funds target rate by 25 basis points in March.

The S&P 500 (.SPX) gained 1.77 points, or 0.04%, to 4,783.35, the Nasdaq Composite (.IXIC) fell 4.04 points, or 0.03%, to 15,095.14, and the Dow Jones Industrial Average (.DJI) increased 53.58 points, or 0.14%, to 37,710.1.

The S&P 500's utilities sector (.SPLRCU) saw the most percentage rise out of the 11 key sectors. The largest decline in energy shares (.SPNY) was caused by declining oil prices.

Chinese businesses with U.S. listings, such as Alibaba Holdings, PDD Holdings (PDD.O), and JD.Com Inc., saw gains ranging from 0.6% to 2.7%, while China's blue-chip stocks had their largest surge in five months.

CytoSorbents (CTSO.O) had a 33.4% decline after the company's surgical hemostasis device failed to achieve the primary trial objective. 9.46 billion shares were traded on U.S. exchanges throughout the whole session, which is lower than the average of 12.57 billion shares for the previous 20 trading days.