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U.S. stocks on Wednesday opened lower, but it might be difficult to stop the ongoing momentum in Wall Street’s seven-week bull run.
Minutes after the opening bell, the benchmark S&P 500 (SP500) was -0.2%. The index in the previous session ended less than 30 points shy of its record closing high. The tech-heavy Nasdaq Composite (COMP.IND) was also -0.2% and so was the blue-chip Dow (DJI).
The Dow (DJI) and the even more tech-focused Nasdaq 100 (NDX) have already scaled all-time peaks.
Snapshot: There’s been a shift in expectations for monetary policy since late October, sending equities on a broad seven-week rally. The most recent boost came during last week’s FOMC meeting, where Fed Chair Jay Powell formally lowered inflation forecasts for 2024 and telegraphed three rate cuts in the new year. “The question of when will it become appropriate to begin dialing back the amount of policy restraint in place… is clearly a discussion topic out in the world and also of discussion for us,” he declared. “I would say there’s a general expectation that this will be a topic for us looking ahead.”
Notably, the biggest contributors to the S&P 500’s (SP500) banner year have been the usual suspects, currently dubbed the Magnificent Seven. The group that includes Alphabet (GOOGL), Amazon (AMZN), Apple (AAPL), Meta (META), Microsoft (MSFT) Nvidia (NVDA) and Tesla (TSLA) is up a combined 75% in 2023, while the remaining 493 companies in the S&P 500 are about 12% higher, resulting in a 25% YTD gain for the index as a whole. The bull market has given big returns to many investors, and has just seen Wall Street’s fear gauge – known as the VIX – slide to its lowest level since the start of the COVID pandemic.
What’s in store for 2024? “The pivot from ‘higher for longer’ to rate cuts is bullish for the stock market as it could cancel the recession,” notes SA analyst Damir Tokic, while Investing Group Leader Victor Dergunov says that stocks could even go much higher next year. Zoltan Ban takes a contrarian view, predicting that the S&P 500 will decline to 3,500 due to various factors such as higher oil prices and a slowing economy. “There is little doubt that FOMO has crept back into the market the same way we’ve seen in the past,” Fear & Greed Trader cautions in Wall Street: Investing In 2 Different Worlds.