Dow opens slightly lower after notching 5th straight record close

U.S. stock indexes were edging lower on Wednesday morning as Wall Street struggled to build on their year-end rally with a fresh record in sight for the S&P 500 index.

How are stock indexes trading

  • The S&P 500
    was dipping 10 points, or 0.2%, to 4,757

  • The Dow Jones Industrial Average
    was falling 83 points, or 0.2%, to 37,477

  • The Nasdaq Composite
    was easing 21 points, or 0.2% to 14,979

On Tuesday, the Dow booked a fifth straight record close, while the S&P 500 rose and the Nasdaq extended its winning streak to a ninth day.

What’s driving markets

U.S. stocks were lower on Wednesday morning with the S&P 500 less than 1% shy of the all-time closing high of 4796.56 it recorded at the start of January 2022.

The Wall Street large-cap benchmark has jumped 24.2% this year, partially powered by hopes that the U.S. economy has not been too badly damaged by the Federal Reserve’s ratcheting up of interest rates to cool inflation.

The latest leg of the rally reflects hopes that with inflation back down to 3.1%, the central bank will begin quickly trimming borrowing costs next year. Not even an concerted effort by Fed officials to counter the market’s rate-cut optimism has damped trader’s ardor.

This dismissal of less-dovish Fedspeak has left some observers bemused. “Isn’t it amazing how investors ignore the hawkish Federal Reserve comments but fully embrace the dovish commentaries,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.

“Investors are dreaming of aggressive rate cuts in an environment of strong economic growth, and that is not the right recipe for easing inflation and keeping it sufficiently low. The robust economic data and high earnings expectations are not compatible with a dovish Fed,” she added.

See: Why the 60-40 portfolio is poised to make a comeback in 2024

Perhaps the current bullishness is also reflective of seasonal trends, with optimism about a festive bounce underpinning stocks. The “Santa Claus Rally” period stretches from the last five trading days of the year and first two trading days of the new year, according to the Stock Trader’s Almanac.

Since 1950, the S&P 500 has averaged a gain of 1.32% and closed higher 78.1% of the time over that period, according to Dow Jones Market Data.

U.S. economic updates set for release on Wednesday include the November existing home sales and December consumer confidence at 10 a.m. Eastern time.

Companies in focus

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