UPDATE: Wall Street’s main indexes are experiencing a significant pause today as Treasury yields surge, causing ripples in the market following robust economic data. As of early trading on December 12, 2023, the Dow Jones Industrial Average has fallen by 54.67 points, or 0.11%, settling at 48,308.01.
The latest reports confirm that the U.S. economy expanded at an annualized rate of 4.3% in the third quarter, outpacing economists’ expectations of 3.3%. This growth is primarily driven by strong consumer spending, leading to an increase in the 10-year U.S. Treasury yield to a more than one-week high of 4.19%. The dollar has also trimmed its losses in response to these developments.
Market analysts are closely watching the implications of this economic upturn. Traders are now anticipating at least two interest rate cuts of 25 basis points next year, although the likelihood of the first cut happening as early as January has decreased slightly to 15% from 18% prior to the economic data release.
Consumer confidence data for December is anticipated later today, which could further influence market sentiment. Meanwhile, the S&P 500 has gained 4.11 points or 0.06%, reaching 6,882.60, while the Nasdaq Composite rose by 17.52 points, or 0.08%, to 23,447.50.
Market sectors are showing mixed performance. Six of the eleven S&P sectors have gained, led by energy and communication services, while consumer staples and real estate lag behind. Mark Malek, chief investment officer at Siebert Financial, noted, “(The AI trade) is still very volatile. It is absolutely touch-and-go and I feel like that’s going to be a theme that really is going to carry forward throughout next year.”
The recent surge in U.S. stocks has fueled hopes of a potential “Santa Claus rally,” a seasonal trend where the S&P 500 often sees gains in the last five trading days of the year and the first two days of January. This year, that period begins tomorrow and continues through January 5, 2024.
As the holiday approaches, trading volumes have been light and are expected to thin further. The U.S. stock markets are scheduled to close early at 1 PM local time on Wednesday and will remain shut on Thursday for Christmas.
Notably, U.S.-listed shares of precious metal miners have extended their recent gains as gold and silver prices hit all-time highs amid a weakening dollar and increasing geopolitical tensions. Additionally, Huntington Ingalls, a U.S. military shipbuilder, saw its stock rise by 1.4% after former President Donald Trump announced plans for a new “Trump class” of battleships, claiming they would be larger, faster, and “100 times more powerful” than previous models.
Overall, the day has been marked by a ratio of declining issues outnumbering advancers by 1.33-to-1 on the NYSE and 1.56-to-1 on the Nasdaq. The S&P 500 recorded 26 new 52-week highs alongside three new lows, while the Nasdaq Composite logged 33 new highs and 62 new lows.
As the trading day unfolds, watch for further updates on consumer confidence data and market reactions that could shape the remainder of the week.
