The major stock market indexes eked out gains Friday but scored strong gains for a third straight week as Treasury yields continued to fall. The advance has been sparked by surprisingly tame U.S. inflation data that gave hope to investors that the Federal Reserve’s string of interest rate hikes was in the rearview mirror. The Dow Jones index advanced 1.9%, the S&P 500 rose 2.2%, and the Nasdaq Composite climbed 2.4%. In the past three weeks, the Dow gained 7.8%, the S&P surged 9.6%, and the Nasdaq jumped 11.7%.
US markets have been sending a pretty clear message of late. More bets are signaling that the Federal Reserve is done hiking interest rates to rein in inflation—and that’s spurred a big November rally for stocks. With new data indicating price surges are ebbing and the economy slowing just as the Fed intended, some of the more optimistic investors are even putting wagers on a rate cut for early next year.
Let the good times roll.
Future Wealth’s View
Just last week, we had titled our report saying that the turning point is nigh. Well, it now appears that we have officially begun the bull market that has eluded us for over a year since the stock market hit bottom in October 2022. CPI dropping to 3.2% is the final indication that the Fed has done its job and now the markets can begin to celebrate again. With the economy humming along and unemployment at reasonable levels, we could be in for a nice year end rally and a strong 2024.
Also notable is how China’s leader Xi Jinping has come to the US begging for help with his tail between his legs after China’s economy has stumbled since Xi’s catastrophic pandemic reopening and triggered an infection wave that’s estimated to have killed almost two million people. Much like the stock market, the economy has a way of humbling even the most arrogant.
The US stock market remains the best place to invest. The massive rush of cash from those in money market funds will likely catapult the market to a strong rally that will give confidence to even the most cautious of investors. For those who have been patiently waiting for the opportunity to jump back into the stock market, the moment is here.