(New York) The year 2023 on Wall Street will have been that of a euphoric and unexpected rebound, accelerated in the last two months by the markets’ certainty that inflation is disappearing and that the end of high interest rates is coming. profile in the United States.
On Friday, the indices concluded with a decline but not far from records, in a deserted market at the end of the year.
The Dow Jones index lost 0.05% to 37,689.54 points. The NASDAQ, with a strong technological coloring, fell by 0.56% to 15,011.35 points and the S&P 500, only 1% from its historic record, dropped 0.28% to 4769.83 points.
But over the year as a whole, buoyed by the firm hope that the economy will land softly after crushing inflation, the Dow Jones gained almost 14%.
The S&P 500, the most representative of the market, is 1% from its all-time high of January 2022, up 24% over the year.
Finally, the NASDAQ soared by more than 43%, equipped with the “Magnificent Seven”, the mega-capitalizations of technology, such as Microsoft, Alphabet and Nvidia which notably benefited from the frenzy of the development of artificial intelligence.
“It’s been a great stock market this year,” commented David Kotok, investment director at Cumberland Advisors, interviewed by AFP.
Among the stars of the year, Tesla shares more than doubled, going from 113 to 248.48 dollars. Nvidia, the darling of the artificial intelligence sector, increased more than threefold, closing at $495.22.
Another most spectacular rise was that of the deferred payment specialist Affirm, five times higher than its January level at $49.14.
However, the year saw “a rise in interest rates” from the American central bank (Fed), which is generally unfavorable for stocks because it makes business investments more expensive, but also “a mini-banking crisis, the strikes, and a worsening geopolitical situation,” recalled Art Hogan of B. Riley Wealth Management.
The year 2023 began with expectations of a recession supposed to be caused by the tightening of monetary policy “but it never materialized,” recalled Maris Ogg, portfolio manager for Tower Bridge Advisors.
“We started with fear of a recession and ended in complete euphoria with the idea that interest rates were going to fall. Now that the market has already taken all of this into account, it could be much more dependent on company results in 2024,” she says, believing in a more difficult year ahead for company margins.
However, analysts are banking on average profit growth of 12% in 2024.
Americans not convinced
The brilliant performances of Wall Street, so far in any case, have hardly dazzled Americans who “continue to complain about the economy and who do not feel prosperous,” adds the expert from Tower Bridge Advisors.
Jobs are still plentiful, with only a 3.7% unemployment rate, and Americans’ real estate assets have further increased in value.
But “they find that the economy is not as good as it was a few years ago and that will undoubtedly handicap Joe Biden”, if he is the Democratic candidate for the presidential election the year next time, underlines Maris Ogg.
The octogenarian is at an all-time low in popularity compared to his predecessors in the White House less than a year before the election.
A Gallup poll in December showed that only 39% of Americans approved of his action.
Wall Street’s enthusiasm has accelerated in the last two months with the sharp decline in interest rates on the bond market. They fell from 5% in October to 3.87% for ten years, in anticipation of a reorientation of the Fed’s monetary policy in the face of inflation falling to 3.1% (according to the CPI index in November).
This situation, however, concerns Steve Sosnick of Interactive Brokers.
“If rates have to fall that much”, this means that we must support an economy which is becoming “problematic”, fears the analyst.
At the same time, Steve Sosnick thinks that the six rate cuts (of a quarter of a percentage point) envisaged by the market “are not realistic because the Fed does not like to be too aggressive just before a presidential election.” “The central bank does not want to be seen as supporting one side or the other,” he added.
Art Cashin, director of trading operations for UBS, believes that in 2024 it will be necessary to “be vigilant about the geopolitical situation”.
The Toronto Stock Exchange closes higher
Gains in the industrial and utility sectors lifted Canada’s main stock index Friday, while U.S. stock markets slipped.
The S&P/TSX Composite Index closed up 29.06 points at 20,958.44.
The Canadian dollar traded at 75.61 US cents, compared to 75.69 US cents on Thursday.
On the New York Mercantile Exchange, crude oil was down 12 cents at US$71.65 per barrel and natural gas slipped four cents to US$2.51 per million Btu.
Gold was down US$11.70 at US$2,071.80 an ounce and copper was down 3 cents at US$3.89 a pound.
The Canadian Press