The Dow was wavering between marginal gains and losses on Friday as the major U.S. equity indexes were all on track to book their seventh straight week in the green in what would be the longest winning stretch for the S&P 500 index since November 2017.
How stocks are trading
-
The S&P 500
SPX
was flat at 4,719. -
The Dow Jones Industrial Average
DJIA
gained 23 points, or 0.1%, to 37,271. -
The Nasdaq Composite
COMP
rose by 60 points, or 0.4%, to 14,821.
All three indexes have gained more than 2% this week, according to FactSet data. The S&P 500 was up 2.3%, on track for its biggest weekly advance since the week ending Nov. 3. All three indexes have climbed for six straight sessions through Thursday.
What’s driving markets
Following a modest pullback at the open, the S&P 500 and Dow vacillated between modest gains and losses on Friday. Should the blue-chip gauge finish higher, it would mark a third straight record close.
Stocks have seen a broad rally this week, with small-caps outperforming their large-capitalization peers.
The small-cap Russell 2000 index
RUT
was up more than 6% for the week early Friday, although it was flat Friday at 2,000, according to FactSet data.
This renewed appetite for stocks in the waning days of 2023 has been fueled in part by a Fed meeting earlier this week in which officials surprised investors by indicating rates have peaked and mapping out rate cuts for 2024.
Stocks hit a speed bump earlier in the session after New York Federal Reserve Bank President John Williams pushed back against those expectations during an interview with CNBC.
“We aren’t really talking about cutting interest rates right now,” Williams said.
See: Williams says the Fed isn’t ‘really talking about cutting interest rates right now’
Despite Friday’s initial pullback, the S&P 500 has already swung back into the green and continues to trade within 1.75 percentage points of its record close from January 2022. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was slightly higher but hovered around 3.920%.
Investors have justification for betting that stocks can continue to climb. Matt Weller, global head of research at Forex.com and City Index, said in emailed commentary that, although seven-week winning streaks are rare, when they have happened they typically have arrived in the middle of secular bull markets.
“After a huge rally through the middle of the week, it’s a foregone conclusion that the S&P 500 will finish higher for the seventh consecutive week, a relatively rare streak historically,” Weller said.
Investors may see a more volatile session on a “triple-witching” Friday, with options contracts tied to more than $5 trillion worth of stocks and exchange-traded funds and indexes set to expire. Also, money managers will need to finalize changes to their holdings as the quarterly rebalancing of the S&P 500 and Nasdaq-100 will kick in after the market close on Friday.
See: Traders brace for chaotic ‘triple witching’ Friday as $5 trillion in expiring options collides with index-rebalancing mania
U.S. economic data released Friday included the New York Fed’s Empire State manufacturing survey, which showed U.S. manufacturing activity continued to struggle as the gauge tumbled to a four-month low. Later, flash services and manufacturing PMIs from S&P affirmed that manufacturing activity remained weak, while services activity reached a five-month high.
See: U.S. economy posts steady but lackluster growth at year’s end, S&P finds
The S&P flash U.S. services PMI rose to a five-month high of 51.3 in November, from 50.8 in the prior month.
The Fed’s stance was starkly different from that of the Bank of England and European Central Bank, which each left interest rates unchanged on Thursday. ECB President Christine Lagarde also said rate cuts wouldn’t be considered “until data turns conclusive.”
But fresh economic data out of Europe indicated Lagarde may come under more pressure in the new year. German government bonds fell
BX:TMBMKDE-10Y,
and the euro
EURUSD,
weakened after fresh data showed Europe’s December composite purchasing managers index falling to a weaker-than-expected 46.7, with French PMI data also disappointing with a fall to 43.7.
Companies in focus
-
Palantir Technologies Inc. shares
PLTR,
+1.52%
rose on Friday after the company announced an extension to a U.S. Army contract. -
Steel Dynamics Inc.’s stock
STLD,
+6.42%
shot higher after the company reported earnings, making it the best-performing company on the S&P 500. -
Costco Wholesale Corp. shares
COST,
+4.28%
rose to a record at $657.74 a share after the company reported fiscal first-quarter earnings and revenue largely in line with expectations after market close on Thursday, and also announced a special dividend of $15 a share. -
JD.com
JD,
+4.90%
was the best-performing stock on the Nasdaq-100 Friday as fresh stimulus out of China helped boost shares of companies based in the world’s second-largest economy. Alibaba Group Holding Ltd.’s stock
BABAN,
+3.21%
was also higher.
