S&P 500 Rallies with Longest Winning Streak Since 2017, Fed Signals Lower Borrowing Costs

Summary

  • This week saw the benchmark index’s longest weekly winning streak since September 2017.
  • The rally is attributed to the Fed’s indication of lower borrowing costs in 2024.
  • There was a notable downturn in the real estate sector and utilities, both of which yielded some of their gains from the Fed statement.
  • Simultaneously, semiconductors saw a 0.4% surge, showing a 9% increase for the week.
  • These developments have increased the S&P 500 by around 23% year to date.
  • The statement from Fed Chair Jerome Powell indicated an unwillingness to place undue burden on the economy via sustained high rates.

Benchmark Index’s Notable Performance

The benchmark index had its most extended weekly winning streak since September 2017. This rally can be attributed to a statement from the Fed on Wednesday which promised lower borrowing costs in 2024.

Real estate and Utilities Sector

The most profound decline was noted in the real estate sector, followed swiftly by utilities – both gave up some of the gains obtained after the Fed’s statement. Nonetheless, the overall growth of the S&P 500 for the year is placed at approximately 23%.

Index of Semiconductors

A surge of 0.4% took place in the semiconductor index this week which resulted in about a 9% increase throughout the week.

Fed’s Impact on Economy

Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh, suggests that Fed Chair Jerome Powell is hesitant to hamper the economy by maintaining higher rates without substantial justification.

Market Volatility and Stock Performance

The “triple witching”, which involves the expiry of quarterly derivatives contracts tied to stocks, index options, and futures, could potentially stir up market volatility late in the day. Meanwhile, thanks to the demand for cheaper groceries, shares of Costco Wholesale showed a promising 4.4% increase after outperforming Wall Street’s first-quarter estimations.

Trading Impact Statement

Furthermore, the S&P 500 posted 48 new 52-week highs and 2 new lows while the Nasdaq Composite recorded 149 brand-new highs and 69 new lows. This varying performance of these indexes could significantly impact forex trading and associated assets.

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