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Stocks softened on Friday, closing modestly lower on the last trading day of 2023 and capping a robust year-end rally as investors eyed easier monetary policy in the year ahead.
The stock market has seen remarkable upward momentum in the closing months of the year, setting all three major indexes on course for monthly, quarterly and annual gains.
The Dow Jones Industrial Average slipped 20.56 points, or 0.1%, to 37,689.54, the Nasdaq fell 0.6% and the S&P 500 was down 0.3%.
For the year, the S&P 500 rose 24%, the Dow added 14% and the Nasdaq gained 43%
“On January of this year, 363 days ago, if I said I think the S&P is going to gain more than 20% in 2023, you would have put me into the slightly nutty category,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “There’s certainly reason to be pleased this year and there’s reason for optimism going into 2024.”
“There’s really no reason for today’s small sell-off,” Pursche added. “There’s no news that’s driving it.”
“I would ascribe it to last-minute portfolio changes, profit taking as we enter the new year, and perhaps some rebalancing.”
The S&P 500 is still drifting within 1% of its closing high reached on Jan. 3 2022. Closing above that level – 4,796.56 – would confirm the bellwether index entered a bull market when it touched its bear market trough in October 2022.
The Dow Jones hit a record high on Thursday, while the Nasdaq has outperformed Wall Street peers, given the artificial intelligence boom and a surge in megacap stocks.
As per CME’s FedWatch tool, the probability of policymakers cutting the Fed funds target rate by 25 basis points in March stood at nearly 74%.
The year 2023 was marked by aggressive Fed rate hikes, which were finally halted in September, the US banking crisis in March, an artificial intelligence stocks boom, the Israel-Hamas war, and economic concerns that eventually bolstered the case for policy easing bets, among others.
Meta Platforms, one of the top annual gainers on the S&P 500, fell 1.2%.
Investors are winding down for the holiday season. The markets will be closed on Monday, Jan. 1, on account of New Year’s Day.
Among corporate movers, Uber Technologies and Lyft lost 2.5% and 3.5%, respectively, following a report that Nomura downgraded the ride-sharing platforms.