U.S. stock futures indicate a cautious opening on Monday after the market’s seven consecutive weekly winning streak. As the time window for the Santa Claus rally rapidly approaches, investors are expressing concern about the quality of the market run-up thus far. Nevertheless, economic fundamentals are poised to improve in the new year as the Fed gradually reverses its rate hikes. Coupled with a soft landing, this scenario could offer an ideal foundation for stocks to consolidate the gains seen this year.
M&A activity is picking up, and this could be viewed as a signal of confidence in corporate America.
Key Takeaways From Last Week’s Trading:
Tame inflation data and the Fed’s indication of a reversal in its rate hikes in the new year boosted risk appetite in the week ending Dec. 15. The Dow Industrials and the Nasdaq Composite recorded gains for a seventh consecutive session, while the S&P 500, after a six-session winning streak, closed marginally lower on Friday.
The major averages have notched their seventh straight week of gains, with the 30-stock Dow Industrials reaching a record high. The Nasdaq Composite concluded the week at its highest level since Jan. 14, 2022, while the S&P 500 settled just below its peak since Jan. 12, 2022.
US Index Performance In Week Ended Dec. 15
| Index | Performance (+/-) | Value |
| Nasdaq Composite | +0.35% | 14,813.92 |
| S&P 500 Index | -0.01% | 4,719.19 |
| Dow Industrials | +0.15% | 37,305.16 |
| Russell 2000 | +0.77% | 1,985.13 |
Analyst Color:
The Dow Industrials went from correction to record highs in merely 32 trading days, with falling interest rates and signs of a soft-landing scenario underpinning the recovery, said LPL Financial Chief Technical Strategist Adam Turnquist in a note.
Looking at data over the past 100 years and filtering for record highs occurring three months apart, the analyst said, the Dow Industrials has generated an average 12-month forward return of 11.1% following a record high, with 71% of the time the index was higher. The analyst said he now looks toward the Dow Jones Transportation Average to confirm the breakout.
The Dow’s record-high rally is “another piece of evidence supporting the health and sustainability of the current bull market,” he added.
Chart Courtesy Of LPL…
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