U.S. stocks experienced a slight increase on Thursday, reflecting a year of strong performance on Wall Street. As of 09:35 ET, the Dow Jones Industrial Average (DJIA) had risen by 55 points (0.1%), the S&P 500 had gained 7 points (0.2%), and the NASDAQ Composite had advanced by 30 points (0.2%). These gains build on Wednesday's positive session, where the DJIA increased by over 110 points (0.3%), the S&P 500 rose by 0.1%, and the NASDAQ Composite climbed by 0.2%.
Impressive Rally and Annual Gains
The three main indices are on a trajectory to secure their ninth consecutive winning week, marking a significant late rally. The DJIA and S&P 500 are expected to conclude 2023 with gains of 13% and 24%, respectively, with the S&P 500 nearing its highest closing level set in January 2022. The NASDAQ Composite has witnessed a remarkable 44% surge, buoyed by a rebound in major tech companies.
Despite the market's uptrend, recent data showed an increase in jobless claims, rising by 12,000 to 218,000 last week. This uptick suggests a cooling labor market in the final quarter of the year, adding complexity to the economic landscape.
Market Anticipates Federal Reserve Rate Cuts
The market's positive movement is partly driven by expectations of the Federal Reserve initiating interest rate cuts in early 2024. Current market sentiments, based on the CME FedWatch tool, indicate an 88% probability of a Fed rate cut in March 2024, with futures suggesting over 150 basis points of easing next year. In corporate news, Apple's stock (NASDAQ:AAPL) saw a 0.7% increase following a U.S. appeals court's decision to halt a government-imposed import ban on its smartwatches amid a patent dispute with Masimo (NASDAQ:MASI).
Oil Prices Dip Amid Growing US Stockpiles
Oil prices declined on Thursday due to accumulating U.S. crude stockpiles and ongoing tensions in the Red Sea affecting supply routes. U.S. crude futures fell 1.2% to $73.19 a barrel, while Brent contracts dropped 1.3% to $78.51 per barrel. The decline comes despite shipping firms resuming operations in the Red Sea, as concerns over potential Houthi militia attacks linger. German shipping giant Hapag Lloyd still considers the Red Sea too risky, opting for alternative routes.
Additional Economic Indicators
Furthermore, gold futures saw a 0.4% decrease to $2,084.45/oz, and the EUR/USD traded 0.1% lower at 1.1092. Investors are also awaiting the Energy Information Administration's report on U.S. crude inventories, which follows a recent increase in U.S. crude output to a record 13.3 million barrels per day. As the year draws to a close, U.S. stocks show resilience despite mixed economic indicators, including a cooling labor market and fluctuating oil prices. The anticipation of Federal Reserve rate cuts adds an interesting dynamic to the market, with investors balancing optimism with caution as they navigate through these varied economic signals.
