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Stock Market News for Dec 4, 2023

Market News

U.S. stock markets closed sharply higher on Friday, with the S&P 500 recording its highest close since March 2022 as economic data released showed an economic slowdown. Market participants assessed Chairman Jerome Powell’s recent speech at Spelman College in Atlanta. All three major stock indexes ended in positive territory. For the week, these indexes have finished in the positive zone, too.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) rose 0.8% or 294.61 points to close at 36,245.50. Notably, 23 components of the 30-stock index ended in positive territory, while seven ended in negative zone.

The tech-heavy Nasdaq Composite finished at 14,305.03, rising 0.6%.

The S&P 500 gained 0.6% to finish at 4,594.63. All 11 broad sectors of the benchmark ended in positive territory. The Real Estate and Industrials sectors were the best performers.

The Real Estate Select Sector SPDR (XLRE), the Industrials Select Sector SPDR (XLI), the Consumer Discretionary Select Sector SPDR (XLY) and the Utilities Select Sector SPDR (XLU) gained 2.1%, 1.6%, 1.4% and 1.2%, respectively.

Consequently, shares of Boston Properties, Inc. BXP rose 11.2%. BXP carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) was down 2.2% to 12.63.

Powell Pushes Back on Rate Cut Expectations

Federal Reserve Chairman Jerome Powell emphasized the central bank's cautious approach to interest rate cuts during a speech at Spelman College in Atlanta. Powell acknowledged positive economic indicators but urged patience, stating that it is premature to declare victory over inflation. He emphasized the Federal Open Market Committee's commitment to maintaining a restrictive policy until convinced that inflation is back to the target of 2%.

While inflation has been a concern, Powell indicated a cautious optimism that the economy is moving in the right direction. He emphasized the need to closely monitor data to determine whether the current policy measures are sufficient or if further actions are necessary.

After a series of 11 interest rate hikes, the Fed has kept rates steady in its past two meetings. The next Federal Reserve meeting is scheduled for Dec 12-13.

Oil Prices Continue to Fall on Demand Worries

Oil prices dropped more than 2% on Friday due to disappointment with OPEC+ supply cuts and concerns about sluggish global manufacturing. Brent crude settled at $78.88 a barrel, while U.S. WTI dropped to $74.07 a barrel. Despite OPEC+ agreeing to cut 2.2 million barrels per day in Q1 2023.

Several factors contributed to the downward trend. In the United States, manufacturing exhibited a slowdown, and factory employment declined in November. On the supply side, the United States imposed additional sanctions related to the price cap on Russian oil. U.S. oil rigs increased to 505, the highest since September.

Economic Data

The U.S. Census Bureau reported that construction spending for October had increased by 0.6% against a consensus of 0.3% for the period. The September reported number was 0.4%.

Per the Institute for Supply Management, the ISM Manufacturing Index for November had come in at a reading of 46.7, below the consensus of 48.1 for the period. In October, the reported number was 46.7.

Weekly Roundup

During last week, the S&P 500 recorded a gain of 0.8%, with the Dow experiencing a substantial rally of 2.4%. The Nasdaq also saw an increase of 0.4%.

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