Global Economic Daily - 02/01/2024
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Closing Commentary
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Have a happy New Year!
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Quote of the Day: We pass through this world but once. – Stephen Jay Gould
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Equities: Stocks fell slightly on Friday, but the S&P 500 closed out 2023 with a surprising gain of 24% as inflation slowed, the economy remained strong and the Federal Reserve signaled an end to its rate-hiking campaign. The?S&P 500?rose for nine straight weeks to end the year, its best win streak since 2004. Big Tech stocks lifted the Nasdaq Composite to its best year since 2020 on AI enthusiasm. The broad index fell 13.52 points to settle at 4,769.83, with a 24.2% gain for the year. The S&P 500 ends 2023 just short of a new all-time high. At one point on Friday, it climbed within 9 points, or less than 0.2%, from its record close of 4,796.56 attained in January 2022. The?Dow Jones Industrial Average?lost 20.56 points to close at 37,689.54 on Friday. It finished the year with a 13.7% gain and notched a new record during 2023. The?Nasdaq 100?edged down 72.54 points to 16,825.93 for the session, but rose 43.4% for its best year since 2020. The S&P 500 added 0.3% on the week. The Dow and Nasdaq gained 0.8% and 0.1% for the week, respectively, to clinch their longest weekly winning streaks since 2019. With the Federal Reserve signaling it is likely done with rate hikes, and could even?cut rates?multiple times next year, the 10-year Treasury yield dove from above 5% in late October to less than 3.9% on Friday. As rates fell and labor data remained strong, investors ended the year growing more confident in a possible “soft landing” where the U.S. economy avoids a recession. As a result, the market rally broadened out in the fourth quarter, with the industrial-heavy Dow making a string of record highs in December. The small-cap?Russell 2000?rose more than 12% in December and clinched its best month since November 2020. It also notched its best quarter since the fourth quarter of 2020. TECHNICAL OUTLOOK - The Dow and the S&P remain above the 14, 21 day moving average.
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Crude Oil: Crude futures rose slightly on Friday in thin activity on the last trading day of the year. Oil prices fell sharply on Thursday as some shipping companies said they would resume movements through the Red Sea, easing supply concerns. Major firms had?stopped?using Red Sea routes after Yemen's Houthi militant group began targeting vessels. However, some crude oil and refined product tankers are still opting for the?longer route?around Africa to avoid potential conflicts in the region. Geopolitical tensions in the Middle East continued to support prices. On Friday, Israel?intensified?its attacks in southern Gaza. Data released on Friday by the U.S. Energy Information Administration that showed strong oil demand in October also offered some support to prices. Total U.S. oil demand rose 3.4% in October versus the prior year, the report said. U.S. crude oil output?fell slightly?in October to 13.248 million barrels per day, after it set monthly records in August and September. Production cuts by the Organization of the Petroleum Exporting Countries and allies led by Russia, or OPEC, have proved insufficient to prop up prices, with the benchmarks down nearly 20% from the year's highs. OPEC+ is currently cutting output by around 6 million barrels per day, representing about 6% of global supply. OPEC is?facing?weakening demand for its crude in the first half of 2024 just as its global market share declines to the lowest level since the pandemic on output cuts and?Angola's?exit from the group. TECHNICAL OUTLOOK - The crude remains below the 14, 21 day moving average.
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