S&P 500 falls slightly Friday, but rides 9-week win streak to end 2023 with 24% gain: Live updates

Stocks fell slightly on Friday, but the S&P 500 closed out 2024 with a surprising gain of 24% as inflation slowed, the economy remained strong and the Federal Reserve signaled an end to its rate-hiking campaign. The S&P 500 rose for 9 straight weeks to end the year, its best win streak since 2004. Big Tech stocks lifted the Nasdaq Composite to its best year since 2020 on A.I. enthusiasm.

The S&P 500 fell 0.28% to settle at 4,769.83, while the Dow Jones Industrial Average lost 20.56 points, or 0.1%, to close at 37,689.54.The Nasdaq Composite edged down 0.56% to 15,011.35.

“Momentum continues to remain favorable heading into year end,” said Mona Mahajan, senior investment strategist at Edward Jones. “It’s been quite a phenomenal run over the last eight weeks or so for the S&P 500, so I’m not surprised to see a little bit more moderation in pace the last few days.”

The S&P 500 entered the final trading day of 2023 less than 0.5% from a new record high, but struggled to top the 4,796.56 level attained in January 2022. At the highs of the day, the broad index got within 9 points, or less than 0.2%, from its record close.

Stocks have bounced back this year after a rough 2022. The S&P 500 is up 24.4% in 2023, with the Dow rising 13.7%. The Nasdaq Composite has led the way with a gain of 43.6%.

All the major averages are also on track to notch their ninth consecutive winning weeks, with the S&P up 0.4%. That would mark its longest stretch of weekly gains since 2004. The Dow and Nasdaq are up 0.8% and 0.3%, respectively, and on pace to clinch their longest weekly winning streaks since 2019.

The story for much of 2023 was the excitement around artificial intelligence fueling big gains for the “Magnificent 7” stocks like Nvidia and Microsoft. The enthusiasm bolstered the indexes even as the average stock struggled amid rising interest rates and fueled the outperformance of the tech-heavy Nasdaq.

But with the Federal Reserve signaling it is likely done with rate hikes, and could even cut rates multiple times next year, the 10-year Treasury yield dove from above 5% in late October to less than 3.9% on Friday. Investors have also grown more confident in a possible “soft landing” where the U.S. economy avoids a recession.

As a result, the market rally has broadened out in the fourth quarter, with the industrial-heavy Dow already making a string of record highs this month. The small-cap Russell 2000 is up almost 14% in December, on track for its best month since November 2020.

This expansion in market breadth will likely continue into the new year, although a period of consolidation isn’t out of the question as some of the high-fliers “recalibrate,” said Nancy Tengler, CEO & CIO of Laffer Tengler Investments.

Wall Street will also keep a watchful eye as more Fed speakers weigh in on the prospect of rate cuts ahead of January’s meeting, Mahajan said, noting that any pushback on what the market is pricing could lead to volatility.

“The risk with the Fed is that they will either wait too long, or move too quickly,” Tengler said. “If they cut too soon, and we do see inflation resurge, that’s going to be bad news for everybody.”