The S&P 500 made it seven straight up weeks, the longest stretch since 2017, and at Fridays close stood at 4719. Monday was calm as we waited for the inflation numbers before Tuesday and Wednesdays opening bells. On Tuesday the November Month over Month (MoM) consumer price index edged 0.1% higher than the expected flat reading. Then on Wednesday we had annual inflation come in at 3.1% for the lowest reading in five months and down from Octobers 3.2%. All told the markets remained flat but that all changed when Fed Chair Powell took the stage on Wednesday afternoon, announcing that the Fed is unlikely to hike interest rates further and that it could cut rates three times next year. That news woke up the bulls for gains of over 1% across all major market indices, propelling the Dow Jones Industrial Index to a new all-time closing high. This carried over into Thursday with the yield on the 10-year Treasury dropping below 4% for the first time since August. As mentioned two weeks ago, when yields drop investors look for better opportunities and will turn towards the markets, and that market now includes the Small Cap sector with the Russell 2000 up over 5% for Wednesday and Thursday. On Thursday we also had the average rate on the 30-year mortgage dropping to 6.95%, with rates falling for the seventh consecutive week and hitting the lowest level since early August. Notice that as mortgages have dropped for seven consecutive weeks, the S&P 500 is up for seven consecutive weeks. On Friday the markets took a breather with the S&P 500 down less than a point. From a technical perspective, lets look back at historic highs for the S&P 500. 3 January 2022 marked the first day of 2022 trading and the S&P 500 hit an All-time closing high of 4796.56. The next day it hit an All-time intraday high of 4818.62. We are now two weeks from the end of 2023 and the S&P 500 is 1.64% away from that closing high and 2.11% away from that intraday high. Now looking at these last seven up weeks, it should be noted that the average weekly return has been 1.98%. When you then break it down into two week segments (Week 1 & 2, 2 & 3,..,6 & 7), the average two week return has been 3.26%. So we have the potential to be hitting new all-time highs by 31 December for a two year round trip. And when you factor in that the 2023 S&P 500 intraday low (3794.33) occurred on 3 January, you get what looks like a big V. That said, were hopeful that the trend will continue to be our friend and that well see a Santa Claus rally period which starts on Friday. For TSP TIPS it was a nice week with all individual funds hitting new Year To Date highs on Thursday. The S fund remains at the top of the Performance Ranking leaderboard with a weekly gain of 5.10%, more than double the other three (C, I, and F). As such, we recommend no changes to our current investment mix.
The S&P 500 made it seven straight up weeks, the longest stretch since 2017, and at Fridays close stood at 4719. Monday was calm as we waited for the inflation numbers before Tuesday and Wednesdays opening bells. On Tuesday the November Month over Month (MoM) consumer price index edged 0.1% higher than the expected flat reading. Then on Wednesday we had annual inflation come in at 3.1% for the lowest reading in five months and down from Octobers 3.2%. All told the markets remained flat but that all changed when Fed Chair Powell took the stage on Wednesday afternoon, announcing that the Fed is unlikely to hike interest rates further and that it could cut rates three times next year. That news woke up the bulls for gains of over 1% across all major market indices, propelling the Dow Jones Industrial Index to a new all-time closing high. This carried over into Thursday with the yield on the 10-year Treasury dropping below 4% for the first time since August. As mentioned two weeks ago, when yields drop investors look for better opportunities and will turn towards the markets, and that market now includes the Small Cap sector with the Russell 2000 up over 5% for Wednesday and Thursday. On Thursday we also had the average rate on the 30-year mortgage dropping to 6.95%, with rates falling for the seventh consecutive week and hitting the lowest level since early August. Notice that as mortgages have dropped for seven consecutive weeks, the S&P 500 is up for seven consecutive weeks. On Friday the markets took a breather with the S&P 500 down less than a point. From a technical perspective, lets look back at historic highs for the S&P 500. 3 January 2022 marked the first day of 2022 trading and the S&P 500 hit an All-time closing high of 4796.56. The next day it hit an All-time intraday high of 4818.62. We are now two weeks from the end of 2023 and the S&P 500 is 1.64% away from that closing high and 2.11% away from that intraday high. Now looking at these last seven up weeks, it should be noted that the average weekly return has been 1.98%. When you then break it down into two week segments (Week 1 & 2, 2 & 3,..,6 & 7), the average two week return has been 3.26%. So we have the potential to be hitting new all-time highs by 31 December for a two year round trip. And when you factor in that the 2023 S&P 500 intraday low (3794.33) occurred on 3 January, you get what looks like a big V. That said, were hopeful that the trend will continue to be our friend and that well see a Santa Claus rally period which starts on Friday. For TSP TIPS it was a nice week with all individual funds hitting new Year To Date highs on Thursday. The S fund remains at the top of the Performance Ranking leaderboard with a weekly gain of 5.10%, more than double the other three (C, I, and F). As such, we recommend no changes to our current investment mix.