Stock futures were little changed on Friday as Wall Street looks to end a winning year on a high note and possibly a new milestone.
S&P 500 futures was flat, while the Dow Jones Industrial Average futures ticked dow 16 points. Nasdaq-100 futures inched slightly lower.
The S&P 500 enters the final trading day of 2023 less than 0.5% from a new record high, which could serve as an exclamation point on a rally that has gained strength in the final months of the year.
The S&P 500 is on the cusp of a new record high.
The S&P 500 is up 24.6% in 2023, with Dow rising 13.8%. The Nasdaq Composite has led the way with a gain of 44.2% on the year — on pace for its biggest annual increase since 2003.
All the major averages are also on track to notch their ninth consecutive winning weeks, with the S&P up 0.6%. That would mark its longest stretch of weekly gains since 2004. The Dow and Nasdaq are up 0.9% and 0.7%, 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, which bolstered the indexes even as the average stock struggled amid rising interest rates and fueled the outperformance of the tech-heavy Nasdaq.
The Nasdaq Composite has surged more than 40% in 2023.
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 Thursday. 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.
Ryan Detrick, Carson Group chief market strategist, pointed out on Thursday’s “Closing Bell” that gains of 10% or more in final two months of a year is historically a signal that there is more room to run for stocks.
“A big end of year rally like this is not consistent with the end of a bull market. It usually means that upward momentum, that slingshot, is going to continue,” Detrick said.