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Stocks Rise as 2023 Trading Ends

Stocks rose at the start of the shortened trading week and in the last of 2023, riding the momentum of a year-end rally in which hopes for a soft landing strengthen and readings more Optimists for 2024 are taking hold.

The Dow Jones Industrial Average (^DJI) rose 0.4%, or about 150 points, as of Tuesday’s close. The benchmark S&P 500 (^GSPC) gained 0.4% while the tech-heavy Nasdaq Composite (^IXIC) rose 0.5%.

All three major indexes are up double-digits for the year, with the Nasdaq leading the way, with gains of more than 40% year-to-date. The S&P finished within reach of its all-time high, within 30 points of 4,796.56, set in early 2022.

The rise in stocks comes as Wall Street expects the Fed to soon end its tightening campaign, a stark sign that the central bank’s fight against inflation has taken a decisive and positive turn.

The year began with widespread concerns about price pressures and the potentially destructive consequences of the Fed raising interest rates. But as the final days of the year approach, the narrative has shifted to talk of Fed rate cuts, surprise at slowing inflation and job market resilience. Many market observers believed that job growth would have been dampened by the central bank’s attempt to rein in the economy. But unemployment remains below 4%.

2024 will bring its share of challenges. The recession that many thought was imminent this year may yet take hold. Fed Chairman Jerome Powell stressed that the timing of the rate cut is not set in stone and that if the economy comes roaring back, inviting further increases in inflation, further hikes rates or a delay in cuts could be the next phase of Fed policy action.

“Most of 2023 has been about consumer resilience and waiting for a recession that never came, but we think 2024 will be much more of a year where inflation returns to its peak. target sustainably or where inflation will remain ‘stuck’ and force the Fed to taper is much less than the market expects,” said Chris Zaccarelli, chief investment officer of Independent Advisor Alliance.

The S sign at the intersection of Broad and Wall streets is displayed outside the New York Stock Exchange, Monday, December 11, 2023, in New York.  Stocks drifted higher Monday afternoon on Wall Street, ahead of the Federal Reserve's final meeting of the year.  (AP Photo/Yuki Iwamura)

A sign at the intersection of Broad and Wall streets is displayed outside the New York Stock Exchange, Monday, Dec. 11, 2023, in New York. (Yuki Iwamura/AP Photo) (ASSOCIATED PRESS)

Much of the stock market’s growth this year has been linked to strong returns from big tech companies, including the Magnificent Seven. Apple (AAPL) and Microsoft (MSFT), for example, are up about 50% year to date, more than double the S&P’s 24% gains. Meta (META), in an impressive reversal, has nearly tripled its stock price this year. And AI darling Nvidia (NVDA) has surged nearly 240% this year.

In business news on Tuesday, shares of Intel (INTC) gained more than 4% after the company confirmed it had secured more than $3 billion in incentives from the Israeli government to expand manufacturing of platelets in the country.

New real estate data showed that buyers, faced with tight supply, continue to drive up prices in the U.S. housing market. Home prices increased nationally by 4.8% in October compared to the same month last year, according to a new reading of the S&P CoreLogic Case-Shiller Home Price Index released Tuesday. The 10-city composite index showed an increase of 5.7%, up from 4.8% the previous month. And the 20-city composite index posted a year-over-year increase of 4.9%, compared with a 3.9% increase the month before.

“US housing prices accelerated to their fastest annual pace of the year in October,” Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement. “We are seeing widespread appreciation in housing prices across the country, with steady increases seen in 19 of 20 cities. »

Hamza Shaban is a reporter for Yahoo Finance covering markets and the economy. Follow Hamza on Twitter @hshaban.

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