The Dow retreated from its record levels on Friday after Federal Reserve Bank of New York President John Williams pushed back on the market’s expectations for interest-rate cuts next year.
But after rising for six straight sessions through Thursday, the major U.S. indexes remained on track for a seventh straight week in the green which would be the longest such streak for the S&P 500 index since November 2017, according to FactSet data.
How are stocks trading
-
The S&P 500
SPX
was marginally lower at 4,718. -
The Dow Jones Industrial Average
DJIA
declined by 64 points, or 0.2%, to 37,183. -
The Nasdaq Composite
COMP
gained 67 points, or 0.5%, to 14,828.
All three indexes have gained more than 2% this week, according to FactSet data. The S&P 500 was up 2.3%, on track for its biggest weekly advance since the week ending Nov. 3.
What’s driving markets
Despite a modest pullback at the open, U.S. stocks were buoyant on Friday, with the Dow coming off its second-straight record close. Stocks have seen a broad rally this week, with small-caps outperforming their large-market capitalization peers.
The small-cap Russell 2000 index
RUT
was up more than 6% for the week early Friday, although it was down 0.2% for the session at 1996, according to FactSet data.
This renewed appetite for stocks in the waning days of 2023 has been fueled in part by a Fed meeting earlier this week, where officials surprised investors by indicating rates have peaked and mapped out rate cuts for 2024.
But the S&P 500 and Dow saw early premarket gains fade after the Fed’s Williams pushed back against those expectations during an interview with CNBC.
“We aren’t really talking about cutting interest rates right now,” Williams said.
See: Williams says the Fed isn’t ‘really talking about cutting interest rates right now’
Still, the S&P 500 has continued to trade within 1.75 percentage points of its record close from January 2022. The yield on the 10-year Treasury note
BX:TMUBMUSD10Y
was slightly higher, but hovered around 3.920%.
Investors may see a more volatile session on a “triple-witching” Friday, with options contracts tied to more than $5 trillion worth of stocks, exchange-traded funds and indexes set to expire. Also, money managers will need to finalize changes to their holdings as the quarterly rebalancing of the S&P 500 and Nasdaq-100 will kick in after the market close on Friday.
U.S. economic data released Friday included the New York Fed’s Empire State manufacturing survey, which showed U.S. manufacturing activity continued to struggle as the gauge tumbled to a four-month low.
The Fed’s stance was starkly different to the Bank of England and European Central Bank’s each leaving interest rates unchanged on Thursday. ECB President Christine Lagarde also said rate cuts wouldn’t be considered “until data turns conclusive.”
But fresh economic data out of Europe indicated Lagarde may come under more pressure in the new year. German bunds fell
BX:TMBMKDE-10Y
and the euro
EURUSD,
weakened after fresh data showed Europe’s December composite purchasing managers index falling to a weaker-than-expected 46.7, with French PMI data also disappointing with a fall to 43.7.
Hong Kong stocks
HK:HSI,
meanwhile, climbed more than 2% after the People’s Bank of China pumped fresh money into the economy, allocating $112 billion in one-year loans to commercial lenders.
The move will ease worries about a potential cash shortage amid government debt issuance and follows relaxation in home-buying rules in major Chinese cities as the housing market sags.
Companies in focus
-
Palantir Technologies Inc.
PLTR,
+2.80%
shares rose on Friday after the company announced an extension to an Army contract. -
Steel Dynamics Inc.’s
STLD,
+5.76%
stock shot higher after the company reported earnings, making it the best-performing company on the S&P 500. -
Costco Wholesale Corp.
COST,
+3.59%
shares rose after the company reported fiscal first-quarter earnings and revenue largely in line with expectations after market close on Thursday, and also announced a special dividend of $15 a share.