Traders work on the floor of the New York Stock Exchange.
Brendan McDiarmid | Reuters
The Dow Jones Industrial Average hit a new 2023 high on Friday, extending its gains after its best month in more than a year.
The 30-stock index rose 209 points, or 0.6%, and the S&P 500 index rose 0.4%. The Nasdaq Composite rose 0.2%. The Dow Jones Industrial Average hit another all-time high on Friday, taking its year-to-date gain to about 9%.
Federal Reserve Chairman Jerome Powell on Friday said it was “too early to conclude with any confidence” that monetary policy is “sufficiently restrictive,” weighing on market expectations for future interest rate cuts. I argued against it.
Yields also fell after Powell’s cautious remarks, which traders interpreted as a signal that the central bank was at least done raising rates. The 10-year Treasury yield fell 9 basis points to 4.259%.
Adam Crisafulli, founder of Vital Knowledge, said: “The door remains open for further rate hikes, but it’s safe to say that the current bias is neutral (and that tilting that bias into accommodative territory) It won’t take that long.”
November’s big rally was due in part to traders starting to think the Fed was done raising interest rates and could even start lowering them in the first half of next year. The Fed will next set interest rates on December 13th.
Friday’s modest move comes on the heels of a wild November rally. The rise in November ended three consecutive months of decline. The S&P and Nasdaq rose 8.9% and 10.7%, respectively, posting their best monthly performance since July 2022. The Dow rose 8.8%, its best month since October 2022.
This week, the S&P 500 rose 0.6% and the Dow rebounded more than 2%. The rise in the Nasdaq has been almost flat.
Despite recent stock gains, some analysts remain cautiously optimistic about the overall health of the economy.
Data released early Friday showed U.S. manufacturing remained weak in November, with the manufacturing PMI unchanged from the previous month at 46.7, according to the Institute for Supply Management. November was the 13th consecutive month that the PMI, which indicates a slowdown in the manufacturing industry, was below 50.
Anna Rathbun, chief investment officer at CBIZ Investment Advisory Services, said: “This was definitely a disappointing number. It was lower than expected. But importantly, everything underneath it also shows a significant slowdown. “The report was interpreted as another sign of a recession.” The economic slowdown will become serious in 2024.
“The slowdown in U.S. spending has already begun,” Rathbun said. “If we start to see a decline in the labor force, that’s already a lagging indicator. It doesn’t bode well for 2024.”