Background on Key Figures and Relevance
The S&P 500, a widely recognized stock market index that measures the performance of 500 large companies listed on stock exchanges in the United States, reached a record high on Tuesday. This milestone is significant as it marks the third consecutive annual gain for the major indices, including the Dow Jones Industrial Average and Nasdaq Composite.
The relevance of this news stems from the fact that these indices are crucial indicators of the overall health and direction of the U.S. stock market. Investors, both individual and institutional, closely monitor these indices to make informed decisions about their investments. Moreover, the performance of these indices influences global financial markets due to the size and influence of U.S. equities.
Market Performance Overview
S&P 500, Dow Jones, and Nasdaq Composite Gains:
- The S&P 500 closed at an all-time high of 6,909.78 points, up by 0.45%.
- The Dow Jones Industrial Average increased by 0.16% to 48,442.41 points.
- The Nasdaq Composite rose by 0.57% to 23,561.84 points.
Sector Performance:
Seven out of eleven sectors that make up the S&P 500 reported gains, with communication services leading the charge at a 1% increase. Conversely, the consumer staples sector underperformed with a 0.41% decrease.
Technology Sector’s Impact
The technology sector, specifically artificial intelligence (AI) related companies, played a pivotal role in driving the market higher. Despite a previous week’s sell-off due to concerns about high valuations and capital expenditure pressures, AI stocks rebounded. Notable gainers included Nvidia (3%), Broadcom (2.3%), Amazon, and Alphabet, all of which saw gains over 1%.
Economic Growth and FedWatch
GDP Growth:
The U.S. Department of Commerce reported that the Gross Domestic Product (GDP) grew by 4.3% on an annual basis in the third quarter, the fastest pace since the same period in 2023. This growth was fueled by robust consumer spending.
FedWatch and Bond Yields:
Market participants are now pricing in a lower likelihood of a January interest rate cut by the Federal Reserve, according to the FedWatch tool from CME Group. Short-term bond yields have risen in response.
“It’s unlikely we’ll see a recovery from those two rate cuts right now,” said Eric Sterner, director of investments at Apollon Wealth Management.
“The chances of a rate cut early next year are probably lower, but we’ll soon learn who Trump nominates to head the Federal Reserve.”
Trading Hours and Holidays
NYSE and Nasdaq Trading Hours:
The New York Stock Exchange (NYSE) and Nasdaq will close at 12:00 PM (Mexico City time) on the day before Christmas, and will remain closed on Christmas Day.
