Dow closes 100 points higher Wednesday, S&P 500 hovers near a record high: Live updates

Stocks finished higher Wednesday as traders kept an eye on the S&P 500’s march toward record levels.

The S&P 500 and Nasdaq Composite hovered near the flatline. The Dow Jones Industrial Average rose 60 points, or 0.2%.

The broad market indexclosed less than 0.5% of its closing record high of 4,796.56, which was set in January 2022. The benchmark, along with the Dow and Nasdaq, is also enjoying an eight-week winning streak — its longest since 2017.

“The market wants to get this done before the year is out,” said Sam Stovall, chief investment strategist at CFRA. “That’s the overriding effort, but at the same time, once the market does set a new all-time high, it’s probably vulnerable to a post-high pause.”

It has been a strong year for stocks. The Dow and S&P 500 are poised to end 2023 higher by 13% and 24%, respectively. The Nasdaq Composite has jumped 44%, outperforming amid mega-cap technology’s rebound and the artificial intelligence craze. The tech-heavy benchmark is also on track for its biggest one-year gain since 2003, when it surged 50%.

Stocks are in the thick of what’s referred to as the “Santa Claus rally,” a period comprised of the last five trading days of an ending year and first two of a new one. The S&P 500 has risen about 1.3% over this timeframe on average, according to data going back to 1950 from the Stock Trader’s Almanac.

Despite the upbeat sentiment, some on Wall Street worry that the market may be overly optimistic, which could lead to dissappointment if the Federal Reserve starts cutting rates later than expected, said CFRA’s Stovall.The market is pricing in a more than 70% probability of cut at the central bank’s March meeting, according to CME Group’s FedWatch tool.

“Expectations are very high right now,” said Julie Biel, a portfolio manager and chief market strategist at Kayne Anderson Rudnick. “That always makes me nervous because I feel like that can really set you up for heartbreak. The Fed still seems very keen to not make the mistakes of the 1970s.”

Elsewhere, CFRA’s Stovall notes that 90% of stocks in the S&P 500 are trading above their 50-day moving average, suggesting a “bit of frothiness” in the market. Recent bullish sentiment data showing overexcitement could also put investors at risk of getting “sideswiped” by unanticipated events.