In the closing session of 2023, the stock market is experiencing a period of drift, reflecting an unexpectedly robust year of gains on Wall Street. Despite this overall positive sentiment, the noteworthy success stories of the year primarily revolved around the “Magnificent 7” companies—Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, and Tesla. This elite group contributed approximately two-thirds of the gains observed in the S&P 500 throughout the year, with Nvidia leading the pack with an impressive 240% gain.
As of Friday, the S&P 500 index has posted a marginal 0.1% increase, hovering just below the record high set in January 2022. The index boasts a remarkable annual gain of 24.6%. In contrast, the Dow Jones Industrial Average experienced a slight dip of 3 points, or less than 0.1%, settling at 37,707 after reaching a record high the previous day. Nevertheless, the Dow has still achieved a substantial annual increase of over 13%.
The tech-heavy Nasdaq index exhibited a 0.1% rise by 9:55 a.m. Eastern, contributing to its impressive 44% gain for the year, primarily fueled by the remarkable performances of the aforementioned key companies.
In European markets, shares edged higher on the last trading day of the year, reflecting a year of substantial gains. Benchmark indexes in France and Germany recorded double-digit advances, while the UK’s index saw a nearly 4% climb.
In the Asian markets, the Nikkei 225 in Tokyo experienced a modest decline of 0.2% to 33,464.17 on the final trading day, concluding a stellar year with a 27% gain, its best performance in a decade. This surge was attributed to the Japanese central bank’s steps toward ending its longstanding ultra-lax monetary policy. Meanwhile, the Hang Seng index in Hong Kong remained flat, and the Shanghai Composite index gained 0.7%, with both indices closing the year with slight losses.
Reflecting on Wall Street’s performance, the stock market had a relatively calm day on Thursday, and all major indexes are set for weekly gains. The S&P 500 is on track for a rare ninth consecutive week of gains.
As investors entered 2023 anticipating easing inflation due to the Federal Reserve’s interest rate hikes, the year unfolded differently. Inflation settled around 3%, but a resilient economy, buoyed by robust consumer spending and a healthy job market, defied expectations of a weaker economic scenario or recession.
The prevailing sentiment on Wall Street now leans towards the belief that the Fed can orchestrate a “soft landing,” where the economy slows sufficiently to curb high inflation without descending into recession. Consequently, investors are anticipating a Fed rate cut as early as March. The yield on the 10-year Treasury, currently at 3.88%, has seen a gradual increase from the late October low of 5.00%, alleviating pressure on stocks.
In commodities, U.S. benchmark crude oil rose 47 cents to $72.26 per barrel, and Brent crude advanced 46 cents to $77.61 per barrel in electronic trading on the New York Mercantile Exchange.
Featured Image: Freepik @ f11photo
