Introduction:
In a stunning week of financial developments, Wall Street’s main indexes soared, marking their seventh consecutive week of gains and shattering records in a rally fueled by the Federal Reserve’s unexpected dovish pivot.
Key Points:
- š Record-Breaking Rally: Wall Street celebrates as major indexes like the Dow, S&P 500, and Nasdaq achieve historic highs, driven by a surprising shift in Federal Reserve policy.
- š¹ Fed’s Impact on Yields: The Fed’s pivot sends 10-year Treasury yields plummeting to 3.93%, a dramatic drop from October’s 16-year high.
- š Global Currency Shifts: Amidst mixed signals, the Dollar rebounds while the Euro and Pound dip, with all eyes on the Bank of Japanās upcoming policy meeting.
Wall Street concluded its trading week on a triumphant note, with its key indexes not only ending higher but also marking an unprecedented seventh straight week of gains. This rally, breaking multiple records, came in the wake of the Federal Reserve’s surprising dovish shift last week, which supercharged both equity markets and Treasuries.
The Dow Jones Industrial Average climbed modestly, adding 0.15% to reach 37,305.16, marking its third consecutive record close. The S&P 500, despite a minimal dip, secured its longest weekly winning streak in over six years. The Nasdaq Composite, gaining 0.35%, closed at 14,813.92 – its highest in almost two years.
However, the enthusiasm was slightly dampened by some Federal Reserve officials, particularly New York Fed President John Williams. Contrary to the marketās optimism following the Fed’s hint at lower borrowing costs in 2024, Williams emphasized that discussions on rate cuts were premature, refocusing attention on the ongoing battle against inflation.
In the foreign exchange arena, the Dollar, which had been on a decline post-FOMC, made a comeback last Friday. Despite this, the Dollar Index recorded its worst weekly performance in a month, settling at 102.52. The Euro and the British Pound, both previously bolstered by resistance to rate cuts from the ECB and the Bank of England, experienced a downturn.
The spotlight now turns to the Bank of Japan as it stands as the last major central bank to announce its policy decision. Traders are keenly awaiting signals on whether the BoJ will abandon its long-standing low interest rate policy.
In the commodities sector, crude oil experienced a turbulent session on Friday, ending with a marginal loss. Brent futures closed slightly lower at $76.55 a barrel, and U.S. West Texas Intermediate (WTI) crude concluded at $71.43. The fluctuating oil market reflects the ongoing uncertainty regarding future demand.
Gold prices, on the other hand, dipped on Friday but still managed a weekly gain, thanks to the Fed’s dovish stance. Spot gold settled at $2,018.56 per ounce, while COMEX gold futures closed at $2,035.70 per ounce. Silver saw a decline to $23.83 per ounce.
In the digital assets sphere, Bitcoin experienced a week of volatility. After reaching a high of $43,429, buoyed by the Fed’s dovish signal, it retreated over the weekend, testing the $42,000 level amidst light profit-taking as the holiday season approaches.
