S&P 500 hovers near highest level since March 2022.
Market anticipates potential Federal Reserve rate cuts.
Alaska Airlines acquires Hawaiian Airlines in major deal.
Stock Futures Dip as S&P 500 Nears 2023 High
Stock futures experienced a slight decline in overnight trading early Monday, following a robust performance by the S&P 500, which marked a new high for 2023 after a continuous five-week winning streak.
Market’s Performance and Rate Cut Expectations
The S&P 500 soared to its highest level since March 2022 on Friday, culminating in almost a 20% gain year-to-date. The Dow Jones Industrial Average also reported a steady rise for five consecutive weeks, accumulating a 9.4% increase this year.
The Nasdaq Composite, known for its tech-centric portfolio, has surged by 37% in 2023. This upward trajectory seems to be fueled by investor speculation that the Federal Reserve might halt policy changes this month and consider rate cuts next year. This sentiment persists despite Fed Chairman Jerome Powell’s cautious statements regarding premature policy easing expectations.
Rate Cut Forecasts and Federal Reserve’s Stance
Current market trends indicate over a 70% probability of a rate cut beginning in March 2024, as shown by the CME FedWatch Tool. Furthermore, investors are preparing for a cumulative reduction of 1.25 percentage points by year-end. The Fed, which has implemented 11 rate hikes recently, bringing the policy rate to its highest in 22 years, will hold its final meeting of the year on December 12-13.
Mixed Outlook and Historical Trends
Despite the recent rally, some analysts, like Adam Crisafulli of Vital Knowledge, view the market’s surge as potentially unsustainable. November was notably the best month for the Dow since October 2022, with both the S&P 500 and Nasdaq Composite recording their largest monthly gains since July 2022. Historically, December has been a strong month for equities, often witnessing significant gains.
Corporate Developments and Upcoming Jobs Report
In corporate news, Alaska Airlines‘ shares saw a decline after announcing a $1.9 billion acquisition of Hawaiian Airlines, aiming to expand along the West Coast. Investors are also keenly awaiting the November jobs report, due for release on Friday, which is expected to influence the Fed’s interest rate decisions. Economists anticipate the addition of 190,000 jobs to the economy.
Daily E-mini S&P 500 Index
The E-mini S&P 500 Index is currently trading at 4589.25, positioned above both the 200-day and 50-day moving averages, set at 4311.97 and 4387.09 respectively. This placement indicates a bullish sentiment, as the index is trading above these key averages.
The current price is also slightly above the minor support level of 4562.50, suggesting that this level could act as a pivot in the short term. Maintaining above this support level may continue the index’s upward trajectory. However, a break below could lead to a retest of the main support at 4494.00.
Overall, the market sentiment for the E-mini S&P 500 Index appears bullish, supported by its positive stance relative to moving averages and support levels.
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.