By Damian J. Troise And Alex Veiga, The Associated Press on December 18, 2023.
NEW YORK – Stocks ended mixed on Monday as Wall Street’s seven-week winning streak cooled off.
The S&P 500 rose 0.5% and the Nasdaq composite picked up 0.6%, while the Dow Jones Industrial Average finished essentially flat after most of a 0.2% gain faded by late afternoon.
Retailers and big technology companies were among the big gainers. Amazon.com rose 2.7% and Etsy climbed 4.7% for the biggest gain among S&P 500 stocks.
Chipmaker Nvidia rose 2.4%, while Meta added 2.9% and Netflix closed 3% higher.
Energy companies also rallied as the price of crude oil jumped amid growing concerns about attacks from Iranian-backed Houthis on shipping in the Red Sea. Oil and natural gas giant BP has joined the growing list of companies that have halted shipments in the major trade route.
Valero Energy rose 2.6% and Marathon Petroleum added 2.3%.
U.S. Steel soared 26.1% after agreeing to be acquired by Japan’s Nippon Steel. The Pittsburgh steel maker played a key role in the nation’s industrialization. The all-cash deal is valued at about $14.1 billion, or $14.9 billion with debt. That’s nearly double what was offered just four months ago by rival Cleveland Cliffs.
Investors had several other corporate buyout updates to review. Photoshop maker Adobe rose 2.5% following an announcement that it is terminating its planned $20 billion buyout of Figma. Door maker Masonite International fell 16% after saying it will by PGT Innovations in a deal worth about $13 billion.
Treasury yields mostly rose. The yield on the 10-year Treasury rose to 3.95% from 3.92% late Friday.
All told, the S&P 500 rose 21.37 points to 4,740.56. The Dow edged up 0.86 points to 37,306.02, and the Nasdaq gained 90.89 points to 14,904.81.
Markets in Europe finished mostly lower, while markets in Asia closed lower.
The broader market surged last week and added to solid December gains after the Federal Reserve signaled that inflation may have cooled enough for the central bank to shift to cutting interest rates in 2024. The Dow closed out last week with a record, while the S&P 500 ended the week with its longest weekly winning streak in six years, while edging closer to its all-time high.
The benchmark S&P 500 is now up more than 23% this year, while the Nasdaq is up more than 42%.
“The winning streak, plus the fact that the Fed has pivoted as inflation continues to fall, has kicked off kind of a momentum burst,” said Michael Antonelli, market strategist at Baird. “At the end of last week, you had 70% of the S&P 500 above its 20-day moving average. That’s almost three quarters of the index rallying over the short run.”
Lower interest rates typically take pressure off of financial markets. The Fed’s goal since 2022 has been to slow the economy and grind down prices for investments enough through high interest rates to get inflation under control. Economic growth has slowed, but has not dipped into recession, while inflation continues easing.
Wall Street is betting that those conditions mean the Fed is done raising interest rates and could start cutting them in early 2024. Investors will get their last big inflation update of the year on Friday when the government releases its report on personal consumption expenditures. It’s the Fed’s preferred measure of inflation and has been easing since the middle of 2022.
Analysts polled by FactSet expect the measure of inflation to soften to 2.8% in November from 3% in October. It was as high as 7.1% in June of 2022.
Investors will also have a few big earnings reports to review this week, which could give them a better sense of how companies and consumers are faring amid high interest rates and lingering inflation. Package delivery service FedEx will report its latest financial results on Tuesday and Cheerios maker General Mills will report its results on Wednesday. Athletic footwear giant Nike will report its latest results on Thursday.