John Hancock: Weekly Market Recap Week Ended December 15

Sinking yields

The shifting rate outlook sparked a price rally in the bond market, sending yields lower. The yield of the 10-year U.S. Treasury bond fell below 4.00% on Thursday for the first time since late July. The 30-year Treasury yield also dropped, remaining slightly about the 4.00% threshold on Friday.

Fed pivot

The U.S. Federal Reserve kept its benchmark interest rate unchanged at a range of 5.25% to 5.50% for its third meeting in a row but indicated that it’s likely to shift soon to a more accommodative stance. Projections from most Fed members indicated the potential for three rate cuts in 2024. As recently as September, the Fed had projected one more rate hike this year followed by two cuts next year.

2024 earnings outlook

Entering the final two weeks of the year, Wall Street analysts expect that S&P 500 companies will generate double-digit earnings growth next year. On average, analysts are projecting a year-over-year earnings gain of 11.8%, which would exceed the average growth of 8.4% over the past 10 years, according to FactSet. For the first quarter of 2024, the projected growth rate is 6.8%.

Price check ahead

A report scheduled to be released on Friday will be closely watched for any signs that U.S. inflation continued to moderate in November. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The most recent report showed that core PCE inflation excluding food and energy prices rose 3.5% in October on an annual basis, down from 3.7% the previous month.

Source: https://www.jhinvestments.com/weekly-market-recap