U.S. stocks ended the week higher even as some Federal Reserve speakers pushed back on euphoria around interest rate cuts following the central bank’s dovish pivot earlier in the week. Overall, stocks registered their seventh straight week of gains, which was the best winning streak for the S&P 500 since 2017 and the best streak for the Dow since 2019. For the week, the Dow Jones Industrial Average gained 2.9%, the S&P 500 Index was up 2.5%, and the Nasdaq rose 2.9%.

For most US consumers and investors, this week saw some banner headlines, from interest-rate cuts on the horizon, to lower gas prices and a dip in mortgage rates below 7%. Inflation is showing continued signs of easing, giving pinched households a little breathing room, and it’s now forecast to return near its 2% target next year. After the steepest interest-rate hikes in a generation, the Federal Reserve may well have engineered a soft landing, tamping down price surges without big job losses or a downturn.

Are we set up for a bull market run in 2024?

Future Wealth’s View

It finally looks like the Federal Reserve’s rate hiking cycle has come to an end, as the central bank’s policy makers signaled that more rate cuts could be in store next year than they had foreseen in September. Just 15 months ago, the Dow had slid into bear territory. But in recent months, the index has been buoyed by the prospect of a resilient US economy, ebbing inflation and strong corporate earnings.

Just last week, our report was titled “Fresh highs await”. In our report on Dec 3rd, we had stated that “We may be in for a period of continued bullishness in the stock market going into 2024”. Our investment thesis is playing out as expected and all our clients are benefiting from the rotation to growth from their conservative positions earlier this year.

Some day, the Federal Reserve’s monetary policy decisions may once again be like watching paint dry. We’re not there yet. Fed officials now expect three rate cuts next year and four more in 2025. The stock market is hitting new highs on this belief that rate cuts are coming fast. Economic data will dictate how quickly the Fed will cut rates. It is up to us to do the rest of the work.