U.S. stocks continue to show positive development as market participants analyzed increasing anticipations of interest rate cuts from the Federal Reserve in the coming year and looked ahead to a week of crucial economic data. The S&P 500 is currently less than 1% from its closing record high of 4,796.56 hit on Jan. 3, 2022, and should the benchmark index manage to top that mark, it would confirm a bull market that began at the low on October 12, 2022.
Additional signs of a robust economy are also offering support, and it’s worth noting that the comments made by the Richmond Fed President on Tuesday morning added further positivity by highlighting “good progress” in addressing inflation concerns. He said that if inflation keeps slowing like it is now, the central bank “would of course respond appropriately” by cutting interest rates.
Encouraging news is that the Commerce Department reported a substantial positive surprise in the housing sector, revealing that new U.S. home sales soared by 14.8% last month to reach 1.560 million units at a seasonally adjusted annualized rate (SAAR). Analysts expected the number to be essentially unchanged at around 1.360 million units SAAR. Jeffrey Roach, chief economist at LPL Financial, said:
“We are seeing strength in both single-family and multi-family activity as homebuilders are taking advantage of the low supply of existing homes on the market.”
See Related: U.S. Stocks Had The Highest Monthly Rally Of 2023 In November. What To Expect From The Rest Of December?
S&P 500 Index Target
Positive information is that David Kostin, Goldman Sach’s chief U.S. equity strategist, increased this week his S&P 500 index target for the upcoming year. As per Kostin, the enhanced macroeconomic forecast suggests a more favorable setting for introducing IPOs to the market. Additionally, he holds the view that enduring economic growth and declining interest rates will be advantageous for stocks that possess weaker financial standings, especially those susceptible to changes in economic growth.
However, Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets in New York, said that as the S&P 500 approaches a record high as the year draws to a close, the pullback risks have grown. JPMorgan Asset Management also advises investors to remain cautious due to the possibility of a recession, while analysts from Société Générale warn of an anticipated volatile 2024, forecasting the index to oscillate between nearing its all-time high, facing a decline, and then rebounding.
Toward the end of the week, the Commerce Department is anticipated to unveil its conclusive assessment of third-quarter GDP on Thursday. This will be succeeded by the comprehensive Personal Consumption Expenditures (PCE) report on Friday, encompassing income growth, consumer spending, and notably, inflation metrics.
