US stock markets at Wall Street loses its steam in the last trading session on the last day of a bullish 2023 that experienced the S&P 500 index reaching close to its all-time high this week on expectations of interest rate cuts by the Fed in next year.
All of the three benchmark indexes of Wall Street were down in the early afternoon on Friday, with the tech-based Nasdaq (.IXIC) at the bottom in the blue chip stocks. Analysts are worried over how stock markets will perform in 2024 after having an outstanding quarter this year, driven by the growing expectations of a dovish Federal Reserve and falling inflation.
Sam Stovall, chief investment strategist at CFRA Research viewed that, “investors expectations to lighten up early in the new year.” On today’s market fall, he viewed that there might be a few investors who wanted to get ahead of the massive selling that could take place at the start of 2024.
The S&P 500 fell as the trading bell rang today, after coming so close to the all-time high levels reached previously in January 2022. If the market manages to reach above that level before the end of the day, then it would confirm that the S&P 500 index had entered a period of bull run after October 2022.
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The Wall Street Indexes
The three main Wall Street indexes were on their path for creating both monthly and quarterly highs, as well as double digit gains in 2023, before it loses steam on the last day of the year.
The Dow Jones Industrial Average (.DJI) hit a record high on Thursday, while the tech-heavy Nasdaq outperformed its other peers by gaining a massive 43% this year, pertaining to the boom in artificial intelligence and a surge in blue chip stocks.
The IT sector that emerged as the top gainer in 2023, fell on Friday by 0.5%, with Nvidia and Meta Platforms falling by 0.8% and 1.4%, respectively.
By the afternoon, the Dow Jones Industrial Average was down by 0.35% or 132.87 points, Nasdaq fell by 0.75% or 112. 61 points, while the S&P 500 (.SPX) lagged by 0.51% or 24.42 points.
Given a tough last year, stocks have bounced back heavily in 2023 with S&P 500 gaining around 24.6%, Dow Jones by 13.8%, whereas the major boom was seen in Nasdaq which gained more than 43% in the year 2023.
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Fed’s Dovish Mood
This year marked the aggressive policies adopted by the Federal Reserve, which continued for almost the entire year and finally came to a halt in the last quarter. With the Fed finally hinting at the reversal of its interest rate policies, analysts are predicting it to even cut rates multiple times in the year 2024.
Moreover, investors have also been feeling more confident over the soft landing of the economy and US economy avoiding a recession, after the inflation data cools down the tensions.
This resulted in a broadened market activity and a bullish trend in the last quarter of 2023 with Dow Jones making a streak of highs in the month of December.
As per the market analysts, this increased activity will continue in the early weeks of 2024; however, we can’t rule out the possibility of a consolidation period as some of the high fliers correct themselves.