According to an Agence France-Presse report on December 29, Wall Street’s 2023 will be a year of cheerful and unexpected rebounds, accelerated in the last two months as the market confirmed that inflation will fall and high interest rates will end.
On Friday, the major indexes fell slightly, but they were not far from their historical highs. As of the close of the day, the Dow Jones Industrial Average fell 0.05% to 37689.54 points, the Nasdaq Composite Index had a technical correction of 0.56% to 15011.35 points, and the S&P 500 Stock Index fell 0.28% to 4769.83 points.
Throughout 2023, driven by market sentiment that the economy will land moderately after inflation recedes, the Dow Jones Industrial Average rose 14%, and the market's most representative S&P 500 stock index rose 24%, and was only higher than ever. One percentage point lower.
Driven by the "Big Seven" including Microsoft, Alphabet Inc. and Nvidia, the Nasdaq Composite Index rose by more than 43% during the year. These giants mainly benefit from the market's enthusiasm for the development of artificial intelligence (AI). David Kotok, director of the investment department of Cumberland Consulting in the United States, said: "This is a super stock market year."
Among this year's star stocks, Tesla's share price rose from US$113 to US$248.48, artificial intelligence Shares of "darling" Nvidia tripled to $495.22. Another company that saw a surprising share price rise was Affirm, a financial technology company specializing in deferred payments. Its year-end closing price was equivalent to five times its early January price, reaching $49.14.
But Art Hogan of Riley Asset Management said that 2023 has experienced the process of "raising interest rates" by the Federal Reserve, which is generally considered negative for the stock market because it increases the cost of corporate investment. Additional headwinds include "a banking 'mini' crisis, frequent strikes and deteriorating geopolitical conditions."
Maris Ogg, investment manager at Tower Bridge Consulting in the United States, said that at the beginning of 2023, people thought that monetary tightening policies might lead to an economic recession, but "the recession did not happen." She pointed out: "2023 started with worries about an economic recession, but ended with joy that interest rates will be cut. Now the market has taken all these factors into account, and the market in 2024 may be more dependent on the performance of listed companies."
Ogg It is believed that companies may have a difficult time making profits in 2024. However, analysts expect public company profits to grow by an average of 12% in 2024.
reported that Wall Street’s brilliant performance has not let Americans get carried away. Ogg said: "Americans continue to complain about the economy, and they have not felt the economic prosperity."
There are still many job opportunities in the United States, and the unemployment rate is only 3.7%. American real estate is also still appreciating. However, Ogg pointed out that "Americans find that the economy is not as good as it was a few years ago" and if US President Biden participates in the 2024 presidential election as the Democratic candidate, "this may be very detrimental to him." There is still one year left before the US presidential election, but Biden's approval rating has dropped to the lowest level among previous occupants of the White House. A December Gallup poll showed that only 39% of Americans approved of Biden's governance performance.
In the last two months of 2023, Wall Street's vitality also accelerated due to a sharp correction in bond market yields. The U.S. 10-year Treasury bond yield fell to 3.87% in October due to expectations that inflation will fall back to 3.1% and lead to adjustments in the Federal Reserve's monetary policy. This situation worries Steve Sosnick of Interactive Brokers Group. The analyst said that "if interest rates are really going to be lowered" it would mean supporting an economy that has become "uncertain."
Sosnick also believes that the six interest rate cuts expected by the market next year (0.25 percentage points each) are "not realistic at all, because the Fed does not like to take too radical measures before the presidential election and does not want to be seen as supporting a certain party." One camp”.
Art Cashin, head of front-office trading at UBS Group AG, believes that "it is necessary to remain vigilant in terms of geopolitical conditions" in 2024.
(Source: Reference News Network Compiled/Lu Longjun)
