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Weekly Recap | December 26, 2023

Weekly Recap | December 26, 2023

December 27, 2023
Weekly Recap

December 18-22, 2023 Recap

No Coal From Santa

Soft-Landing Increasingly Expected
Equities extended their astounding rally to an eighth straight week, the S&P 500’s longest string of gains in six years. While several economic releases continue to signal upcoming rate cuts and a soft-landing, the rally showed some signs of fatigue with milder gains. Last Tuesday’s housing starts improved following a period of record-high mortgage rates, supporting Wednesday’s better-than-expected existing home sales.

For the Week…
The S&P 500 gained 0.77%, the Dow Jones Industrial Average rose just 0.22% and the tech-heavy Nasdaq Composite outperformed, rising 1.22%. Small caps again outperformed, with the Russell 2000 rising 2.47%, albeit around half as much as its 5.60% surge the prior week.

Third Quarter GDP Slows
The third and final estimate of third quarter Gross Domestic Product (GDP) growth was revised lower to a 4.9% annualized pace. While that’s lower from the prior estimate of 5.2%, it is considerably higher than the 2.1% pace reported for the second quarter. The revision primarily reflected a downward revision to consumer spending, while imports, which are subtracted from GDP, were also revised lower. GDP is a measure of economic activity.

Weekly Sector Insights
All but one of the 11 S&P 500 sector groups were positive for the week. Communication (+4.11%), Energy (+1.66%) and Materials (+1.15%) gained the most while Financials (+0.28%) and Technology (+0.08%) gained the least. Utilities (-1.26%) was the lone lagging sector. Year-to-date, only two sectors remain negative (down from four the prior week): Utilities (-8.19%) and Consumer Staples (-0.59%). Going into the last week of 2023, Technology (+57.42%) and Communication Services (+56.43%) are the top two year-to-date gainers.

Treasury Yields Ease
Treasury yields were narrowly mixed last week. During the week the 10-year Treasury yield briefly tipped below 3.8% to end Friday at 3.895%, down around 0.2% w/w. The 2-year Treasury yield remains inverted versus the 10-year, but finished the week below 4.35%, near its lowest levels since June.

The Latest from @CeteraIM

No Coal from Santa

Core PCE Inflation Narrows

Bullish Sentiment Runs Hot

Economic Calendar

Monday, December 25
Christmas Holiday, All Markets Closed.

Tuesday, December 26
S&P/Case-Shiller Home Price Index, Chicago Fed National Activity Index, Dallas Fed Index.

Wednesday, December 27
Mortgage Activity, Richmond Fed Index.

Thursday, December 28
Jobless Claims, Goods-only Advance U.S. Trade Balance, Pending Home Sales.

Friday, December 29
Chicago PMI. Bond Market Early Close (2 pm ET).

U.S. personal spending rose 0.2% in November, exceeding expectations for flat spending growth. Over the last 12-months, spending rose 5.4%. It's normalizing from outsized growth coming out of the pandemic, but still at the high end of annual spending growth from the prior expansion. Consumers are getting a boost from slowing inflation. Real spending, which adjusts for inflation, increased 2.7% year-over-year. That's the highest pace of real spending growth in 20 months.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

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About Cetera Financial Group
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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. 

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. 

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index. 

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. 

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. 

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. 

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years. 

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years. 

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity. 

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted. 

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index. 

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

 The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

 The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.