S&P 500 Inches Closer to Record High as Rally Stretches to Seventh Week

Barry Adams
15 Dec, 2023
New York City

U.S. market indexes are set to trade higher and build on the gains of the week in Friday's trading after the yield on 10-year Treasury notes hovered at the level last seen in July.

The S&P 500 index and the Nasdaq Composite are up 2.5% this week, and market indexes are likely to close higher for the seventh week in a row.

The Dow Jones Industrial Average, which includes 30 mega-cap companies, traded at a new record high, and the S&P 500 index is only about 1.5% away from its record high reached in January 2022.

The Nasdaq Composite is about 8% away from its record high.

Investors have been bidding up stocks for the last two months, and sentiment was bolstered this week after the Federal Reserve confirmed higher rates are contributing to the sustained weakening in inflation.

Moreover, the Fed's signaling of possible rate cuts in 2024 supported the market advance, and the increase in retail sales provided another upward push to the market sentiment.

The U.S. market rally sparked a worldwide advance, and market indexes in the eurozone also gained after the European Central Bank held its rates steady for the second consecutive time and countered the talks of rate cuts in early 2024.

The Bank of England held its interest rates for the third time in a row, and it stressed that interest rates are likely to stay higher for an "extended period of time."

Elsewhere in the world, the central bank in Brazil lowered its reference rate for the fourth time in a row to 17.25%, and the central bank of Russia hiked its reference rate to 100 basis points to 16%, the fifth increase in a row since July, when rates were 8%.

 

U.S. Indexes and Yields

The S&P 500 index gained 0.09% to 4,709.60, and the Nasdaq Composite decreased 0.2% to 14,705.64.

The yield on 2-year Treasury notes increased to 4.39%, 10-year Treasury notes inched lower to 3.91%, and 30-year Treasury bonds eased to 4.04%.

Crude oil increased $0.27 to $71.82 a barrel, and natural gas prices eased 0.2 cents to $2.39 a thermal unit.

Gold increased $6.35 to $2,041.98 an ounce and extended gains for the second day in a row after the dollar declined following the Fed's rate decision and announcement to cut rates several times over the next two years.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged higher to 102.04.

 

U.S. Stock Movers

Scholastic Corp. dropped 12.7% to $36.21 after the publishing company reported a decline in revenue in its latest quarter.

Revenue in the fiscal second quarter ending in November fell 4% to $562.6 million from $587.9 million, net income advanced to $101.5 million from $100.9 million, and diluted earnings per share rose to $2.45 from $2.12 a year ago.

Revenue declined after the company reduced promotional activities and also eliminated unprofitable orders from book clubs.

The company lowered its full-year 2024 revenue growth outlook to stable or slightly below the prior year compared to its previous estimate of growth of 3% to 5%.

Quanex Building Products declined 7.5% to $31.99, despite the building product maker reporting higher-than-expected revenue.

Revenue in the fiscal fourth quarter ending in October decreased to $295.5 million from $307.5 million, net income advanced to $27.4 million from $24.7 million, and diluted earnings per share rose to 83 cents from 75 cents a year ago.

The company attributed weaker sales to lower prices and softer market demand in North America.

The company did not issue fiscal year 2024 guidance, citing macroeconomic challenges compounded by season uncertainties, but said it would provide an annual estimate at the time of the release of the fiscal first quarter results.