Stocks Rally on Fed, Inflation News – Weekly Update

December 18, 2023 | By Steven DiGregorio

Markets reacted positively last week to cooler inflation and the idea of potential rate cuts next year, adding to the gains of the market’s year-end rally.

The Dow Jones Industrial Average rose 2.92%, while the Standard & Poor’s 500 gained 2.50%. The Nasdaq Composite index picked up 2.85% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, tacked on 2.75%.1,2,3

Rally Continues

Stocks gathered momentum last week after upbeat news from two key inflation reports. But the outcome of the Federal Open Market Committee (FOMC) meeting on Wednesday powered the week’s advance. The combination of the FOMC signaling three rate cuts in 2024 and dovish comments by Fed Chair Powell led to a sharp drop in bond yields and a spike in stock prices, with the Dow Industrials closing above 37,000 and setting an all-time high.4

The rally continued the following day as beneficiaries of lower rates, such as smaller capitalization stocks and real estate, rallied. A solid retail sales number, which reflected a strong consumer and supported the soft landing thesis, also boosted enthusiasm.

Inflation Eases

The anxiously awaited read on November inflation came close to market expectations, with a 0.1% increase over October and a year-over-year increase of 3.1%. Core inflation, which excludes energy and food prices, came in a bit hotter, rising 0.3% month-over-month and 4.0% from a year ago. A 2.3% decline in energy costs helped offset a 2.9% jump in food prices. Shelter prices remained stubbornly high, rising 0.4% from October and 6.5% from last November.5

The inflation news was better on wholesale prices, tracked by the Producer Price Index (PPI). Producer prices were unchanged in November and higher by just 0.9% year-over-year. Excluding energy and food, the monthly increase was also unchanged.6

This Week: Key Economic Data

Tuesday: Housing Starts.
Wednesday: Consumer Confidence. Existing Home Sales.
Thursday: Gross Domestic Product (GDP). Jobless Claims. Index of Leading Economic Indicators.
Friday: Durable Goods Orders. Personal Income and Outlays. New Home Sales. Consumer Sentiment.

Source: Econoday, December 15, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

This Week: Companies Reporting Earnings

Tuesday: FedEx Corporation (FDX)
Wednesday: Micron Technology, Inc. (MU), General Mills, Inc. (GIS)
Thursday: Nike, Inc. (NKE)

Source: Zacks, December 15, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

Box upload

Footnotes and Sources

1. The Wall Street Journal, December 15, 2023
2. The Wall Street Journal, December 15, 2023
3. The Wall Street Journal, December 15, 2023
4. CNBC, December 13, 2023
5. CNBC, December 12, 2023
6. CNBC, December 13, 2023


Share the Wealth of Knowledge!
Please share this market update with family, friends, or colleagues. 
If you would like us to add them to our list, 
simply click on the “Forward email” link below. We love being introduced!


If you would like to opt-out of future emails, please reply to this email with UNSUBSCRIBE in the subject line.

The content of this article is for informational purposes only and is not intended as an offer of investment advice, investment strategy or to buy, transfer or sell any security or other investment vehicle. Information contained herein has been obtained from sources deemed reliable but Spire Wealth Management LLC, Spire Securities LLC and their affiliates, including Compass Asset Management Group LLC, do not guarantee its accuracy. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions of Spire Wealth Management LLC, Spire Securities LLC or its affiliates.

Spire Wealth Management LLC is a federally Registered Investment Advisor. Securities offered through an affiliate, Spire Securities LLC. Member FINRA/SIPC

By accessing any links contained in this article you will be leaving Spire Wealth Management LLC & its affiliates and Compass Asset Management Group LLC websites and entering a website hosted by another party. Although Spire Wealth Management LLC & its affiliates and Compass Asset Management Group LLC have approved these as reliable partner sites, please be advised that you will no longer be subject to, or under the protection of, the privacy and security policies of Spire Wealth Management LLC & its affiliates Compass Asset Management Group LLC websites. The other parties are solely responsible for the content of their websites. We encourage you to read and evaluate the privacy and security policies on the sites you are entering, which may be different than those of Spire Wealth Management LLC & its affiliates Compass Asset Management Group LLC.

Diversification does not guarantee profit nor is it guaranteed to protect assets.

International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. The DJIA was invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of stocks of technology companies and growth companies.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indices from Europe, Australia, and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your financial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

By clicking on these links, you will leave our server, as the links are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave.

Tags: DJIA, Fed, FOMC, Inflation, NASDAQ, Retail, S&P 500

Steve Digregorio Headshot
STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
Connect with him on LinkedIn.
Back to Results | |