US Stocks add to seven-week gains as S&P 500 rises

Monday saw gains in US stocks as the market continued to show signs of strength after a seven-week winning run. The Dow Jones Industrial Average increased by 0.02%, or 7 points. The Nasdaq Composite gained 0.7%, while the S&P 500 increased by 0.5%.

The overall index is currently just over 1% below its closing high of 4,796.56, which was attained in January 2022.

With the sector up more than 2%, companies in the communication services sector outpaced the S&P 500. The largest tech companies gained the most. Alphabet, the parent company of Google, increased by more than 2%, while Meta Platforms climbed by over 3%.

Following news that Japan’s Nippon Steel will acquire US Steel in a $14.9 billion deal, the company’s shares shot up 27%. After Adobe announced that it will cancel its $20 billion merger with cloud-based design platform Figma due to regulatory obstacles, the company’s shares increased by more than 2%.

The longest run of weekly increases for the S&P 500 since 2017 is ending. For the month, the broad market index has increased by more than 3%. The Nasdaq has increased by more than 4%, and the Dow has increased by more than 3%. On Friday, the Nasdaq 100 reached a new closing high while the Dow set an intraday record.

Following the Federal Reserve’s announcement last week that three short-term interest rate reduction are anticipated in 2024 due to declining inflation, investor sentiment turned favourable. The yield on the 10-year Treasury fell below 4% as Treasury yields declined.

It’s a continuation of what the market has been seeing for the most of the month: earnings have stabilized, interest rates are heading lower, and inflation appears to be declining. That might provide a positive environment for stocks.


However, Sandven argued that current projections are excessively high and that some weakening in earnings forecasts could cloud investors’ view of the 2024 picture. Our cautious optimism is tempered by issues such as already inflated values and the possibility of corporate earnings difficulties. According to observers, the equilibrium between bull and bear markets is still present in the new year.

The S&P 500 recovered all of the losses from the last bear market and then rose 5.2% during the next 2.4 months, until another 5% or more collapse that averaged -8.2% hit.

The good news is that none of these following drops turned into a new bear market once the S&P 500 recovered what it had lost during the previous bear market. The bad news is that, on four occasions, the market nearly quickly fell back after recovering its previous loss during a bear market, suggesting that this post-all-time-high rally may not last very long.

The overall index has rebounded to within 2% of its record intraday high of 4,818.62 and its all-time closing high of 4,796.56, which were attained in January 2022. The S&P 500 closed Monday’s trade at 4,746.13.

The S&P 500 would be at about 5,036, up 5% from the closing high; a 5% decline from those levels would put the overall index back at about 4,784.