Published November 10, 2023
Once the Federal Reserve started on its tight money policy trajectory, the equity markets and the economy diverged. The economy has been generally strong, while the stock market has struggled under the weight of ever-increasing interest rates.
At the close of October, stocks had registered a third straight month of declines, with the Dow down 1.3 percent, the S&P down 2.1 percent and the NASDAQ off 2.8 percent. Two days later, U.S. equity markets treated investors to the biggest weekly gains in a year. Ostensibly, this rally was caused by traders closing out short positions before the weekend due to a trifecta of good news that occurred in the last three business days of that week.
The stock market was boosted first by a pause on rate hikes by the Fed on Wednesday, second by a good enough earnings report from Apple on Thursday (Apple being the dominant stock in the NASDAQ index and in most equity funds), and third by a soft jobs report on Friday. This good news about the economy’s resilience, despite lower employment, allowed major indexes to clear significant benchmarks. The Dow Jones had its best week in a year, up 5.1 percent. The S&P and NASDAQ also had their best weeks since November 2022, up 5.85 percent and 6.6 percent, respectively, for the week. The tech-heavy NASDAQ index managed to close above its 50-day moving average – an encouraging development for stock market bulls. The NASDAQ was now up nearly 30 percent for the year. The S&P 500 followed close behind, also bullishly climbing above its 50-day moving average to a gain of 14 percent for 2023 year to […]