New York Stock Market Rises Early... Will the S&P Reach a New High?

The three major indices of the U.S. New York stock market showed gains in the early session on the 28th (local time) while trading near flat. As year-end quiet trading continues, attention is focused on whether the S&P 500 index can break its all-time high.

At around 10:11 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 37,703, up 0.12% from the previous close. The large-cap-focused S&P 500 index was up 0.13% at 4,787, and the tech-heavy Nasdaq index rose 0.13% to 15,118.

Currently, within the S&P 500, healthcare, financials, technology, and utilities stocks are rising, while energy, materials, and consumer discretionary stocks are declining. Apple showed slight gains after news that the U.S. Federal Court of Appeals decided to temporarily suspend the import ban on Apple Watch sales in the U.S. during ongoing patent infringement litigation. Microsoft also rose slightly after Wedbush raised its price target from $425 to $450 per share. JD.com jumped more than 4% following reports of wage increases.

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With only two trading days left this year and a lack of year-end catalysts, trading volume has dropped to about half of last week’s level. Amid this, investors are focusing on whether the Santa Rally will continue. The Santa Rally refers to the last five trading days of the year and the first two trading days of the new year. Since 1950, the S&P 500 has averaged a 1.3% gain during this period, according to CNBC.

The S&P 500 index has risen for eight consecutive weeks through last week, approaching the all-time high of 4,796.56 recorded in January 2022. All three major New York stock indices are expected to close the quarter on an upward trend. On an annual basis, the Dow and S&P 500 have rallied, rising approximately 13% and 24%, respectively. The Nasdaq, buoyed by the artificial intelligence (AI) boom and technology stock rally, has soared an impressive 44% year-to-date. This is expected to be the largest increase since 2003.

Market expectations for interest rate cuts next year, which have supported the recent stock rally, continue. According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds (FF) futures market assigns an 85% probability that the Federal Reserve (Fed) will cut rates by at least 0.25 percentage points in March next year. However, some on Wall Street caution that the market’s optimism based on rate cut expectations may be excessive.

The weekly initial jobless claims released on the day exceeded Wall Street forecasts. According to the Department of Labor, claims for the week of the 17th to 23rd rose by 12,000 to 218,000. Wall Street had expected a lower figure of 215,000. Continuing claims, which count those filing for unemployment benefits for at least two weeks, also increased by 14,000 to 1,875,000. Meanwhile, preliminary home sales for November remained steady at 71.6, unchanged from the previous month. This figure is 5.2% lower than the previous year and below market expectations.

In the New York bond market, the benchmark 10-year U.S. Treasury yield is around 3.81%, while the 2-year yield, which is sensitive to monetary policy, is trading near 4.26%. The dollar index, which measures the value of the U.S. dollar against six major currencies, fell about 0.2% to 100.7.

European stock markets are mixed. Germany’s DAX index and France’s CAC index fell 0.1% and 0.38%, respectively. The U.K.’s FTSE index rose 0.13%.