The S&P 500 ran its string of up weeks to eight as it closed at 4754.63 on Friday. The week started out nice with the S&P 500 trending upward. By 1300 on Wednesday it hit a new Year To Date high of 4778 was just 18 points shy of its record close of 4796. But then the ballon burst and the S&P 500 closed at 4698, down 1.47% on the day and now shy of that record close by almost 100 points. It was hard to find any rhyme or reason behind that three hour drop and my thought is that maybe a lot of hedge funds had an afternoon Christmas party and decided to take some money off the table. The party must have been a good one since they put their money back to work on Thursday as the S&P 500 gapped up at the open, then accelerating into the afternoon and gaining back just over 1% for the day. Friday opened with Novembers "core" Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy prices, coming in at a better than expected 3.2%. And to top that off, core PCE inflation on a six-month annualized basis dropped to 1.9%, below the Feds target of 2% for the first time in three years. Friday also marked the beginning of the Santa Claus Rally (SCR) period, which includes the final five trading days of the year and the first two trading days of the following year. Since 1950, the S&P 500 SCR has been higher 79% of the time with an average return of 1.8%. During the 2022-2023 SCR the S&P 500 rose by 0.8%, and over these last eight weeks the S&P 500s average return has been 1.83%. So lets revisit those S&P 500 historic highs. On 3 January 2022 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 one holiday shortened week from the end of 2023, and the S&P 500 is 0.88% away from that closing high and 1.35% away from that intraday high. As you can see were pretty close, and a nice finish to 2023 would be to set the new closing high on Friday and start 2024 with a new intraday high on 3 January, the end of the Santa Claus Rally period. For TSP TIPS all of the individual funds (C/S/I/F) hit new 52 week highs this week, with the C fund hitting a new all-time record high on Wednesday. In case youre wondering, the I fund needs a gain of 1.22% for a new all-time record high while the S fund needs a 17.73% gain. While the S fund needs the most gain, it is in the #1 position on the Performance Ranking leaderboard. Looking back, it kind of reminds me of the nice run the S fund had between 11 February 2016 ($29.6392) and 31 August 2018 ($54.6885) when it had a gain of 84.51%. Since we did go 100% to equities on 4 December and we have one more investment mix in our pocket, we are recommending a slight increase in the S fund allocation. Lastly, we wish everyone a very Merry Christmas!!
The S&P 500 ran its string of up weeks to eight as it closed at 4754.63 on Friday. The week started out nice with the S&P 500 trending upward. By 1300 on Wednesday it hit a new Year To Date high of 4778 was just 18 points shy of its record close of 4796. But then the ballon burst and the S&P 500 closed at 4698, down 1.47% on the day and now shy of that record close by almost 100 points. It was hard to find any rhyme or reason behind that three hour drop and my thought is that maybe a lot of hedge funds had an afternoon Christmas party and decided to take some money off the table. The party must have been a good one since they put their money back to work on Thursday as the S&P 500 gapped up at the open, then accelerating into the afternoon and gaining back just over 1% for the day. Friday opened with Novembers "core" Personal Consumption Expenditures (PCE) index, which excludes volatile food and energy prices, coming in at a better than expected 3.2%. And to top that off, core PCE inflation on a six-month annualized basis dropped to 1.9%, below the Feds target of 2% for the first time in three years. Friday also marked the beginning of the Santa Claus Rally (SCR) period, which includes the final five trading days of the year and the first two trading days of the following year. Since 1950, the S&P 500 SCR has been higher 79% of the time with an average return of 1.8%. During the 2022-2023 SCR the S&P 500 rose by 0.8%, and over these last eight weeks the S&P 500s average return has been 1.83%. So lets revisit those S&P 500 historic highs. On 3 January 2022 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 one holiday shortened week from the end of 2023, and the S&P 500 is 0.88% away from that closing high and 1.35% away from that intraday high. As you can see were pretty close, and a nice finish to 2023 would be to set the new closing high on Friday and start 2024 with a new intraday high on 3 January, the end of the Santa Claus Rally period. For TSP TIPS all of the individual funds (C/S/I/F) hit new 52 week highs this week, with the C fund hitting a new all-time record high on Wednesday. In case youre wondering, the I fund needs a gain of 1.22% for a new all-time record high while the S fund needs a 17.73% gain. While the S fund needs the most gain, it is in the #1 position on the Performance Ranking leaderboard. Looking back, it kind of reminds me of the nice run the S fund had between 11 February 2016 ($29.6392) and 31 August 2018 ($54.6885) when it had a gain of 84.51%. Since we did go 100% to equities on 4 December and we have one more investment mix in our pocket, we are recommending a slight increase in the S fund allocation. Lastly, we wish everyone a very Merry Christmas!!