The Week Ahead.
Robert R. Fragnito
Chief Operating Officer | Financial Advisor | Portfolio Manager at MCF Capital Management, LLC
U.S. stocks finished in positive territory on Monday as investors looked ahead to a critical week of inflation data and a Fed interest-rate decision.
Stocks traded mostly in positive territory with a few dips in tech shares as the so-called magnificent seven stocks were under pressure (see below). Meanwhile, U.S. stock indexes hit new 2023 closing highs on Monday.
In the wake of a stronger-than-expected November jobs report, equity markets had a strong finish last Friday, hitting some of the highest closes not witnessed since the spring of 2022 for the S&P 500 and Nasdaq, while the Dow Jones had its best close since January 2022.???
Investors will digest the release of November's consumer price index (CPI) on Tuesday. Economists generally expect a modestly cooler headline reading, while the core figure, which strips out energy and food costs, is expected to edge higher.?
On Wednesday, investors will hear from the Federal Reserve and Chair Jerome Powell. The central bank is widely expected to keep rates unchanged this week, and financial markets will be listening intently to Powell for clues of potential rate cuts ahead. This will be the last Fed policy meeting of 2023.
On the global central banking front, the European Central Bank and the Bank of English will deliver rate policy decisions on Thursday, while the Bank of Japan will come next week.?
U.S. Treasury yields ended mixed, relatively unchanged, ahead of the CPI report. Yields were advancing; however, early in the session, after the U.S. Treasury's auction of 3- and 10-year debt came in weak.??
In other markets, oil futures finished higher after significant weekly declines founded on slowing global economic growth concerns and high U.S. supply. WTI crude oil finished above $71 a barrel on Monday.
Finally, gold futures moved over 1% lower to settle on COMEX at $1,978.00 per ounce, while the U.S. dollar advanced on Fed monetary policy easing hopes.
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Looking Ahead
Upward, year-end momentum is the day's slogan and could likely carry stocks to a positive photo finish for 2023. Interestingly, the magnificent seven stocks, primarily responsible for most of the gains this year, slumped. Is this a sign of a broadening rally or a harbinger of a bumpy road ahead? Time will only tell.
Regarding what's on deck for investors this week, inflation gauges and commentary from the Fed's latest and final 2023 meeting could set the tone for where monetary policy is going in 2024. Financial markets have been trading opposite to the Fed's recent communication, so momentum may carry forward regardless of what the central bank and Fed Chair Powell say.
We remain neutral on markets and will monitor incoming data that could impact the future path of monetary policy and U.S. Treasury yield action.
Stay Tuned!
?? Last Week’s Chart
Source: Wells Fargo Investment Institute, “Looking Ahead,” December 8, 2023.
OUR FIRM
MCF Capital Management, LLC is an independent, family-run, financial advisory firm that manages investment portfolios for individuals and businesses through Quantitative Market Data Analysis.
THIS ARTICLE IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INVESTMENT ADVICE.?
???SOURCES:?LSEG Workspace, Dow Jones NewsPlus, MarketWatch, Wall Street Journal, Barron’s, FinancialJuice, Investing .com, CNBC, Wells Fargo Investment Institute, TradingView, Yahoo! Finance