U.S. stock gauges log longest weekly run in years

Financial assets from stocks to bonds notched another winning week as data readouts only reinforced Wall Street’s conviction in early and deep rate cuts next year.

After a choppy low-volume session ahead of the Christmas holiday the S&P 500 notched an eight-week winning streak – the longest in more than five years.

The Nasdaq 100 and a global gauge of equities logged equally lengthy runs – for the tech-heavy Nasdaq it was the longest since July 2021.

The S&P 500 rose a scant 0.2% Friday as a slump in Apple Inc.’s shares weighed on equities gauges.

The iPhone-making giant has added nearly $1 trillion in market value this year.

Nike Inc. was also a drag, dropping 12% Friday after the sports apparel maker flagged a weaker sales outlook and a cost-cutting plan.

The Nasdaq nudged up 0.1%, after setting record highs earlier in the week.

The Supreme Court refusing to push forward a decision on former President Donald Trump’s immunity from prosecution may also have briefly stoked market volatility.

Some on Wall Street are positioning for further stock gains ahead as Friday kicked off the start of the “Santa Claus rally” – a seasonal trend where equities tend to climb into the first few days of the new year.

“Since 1928, the market has rallied an average of 1.7% between the last five days of December and the first two days of the new year, with a 79% positivity rate,” Craig Johnson, Piper Sandler’s chief market technician wrote.

Such an advance would put the gauge within reach of an all-time high.

He expects any pullbacks on the S&P 500 to be shallow with the gauge staying above its early December highs.

Stocks were initially buoyed by data showing the U.S. core personal consumption expenditures price index – the Federal Reserve’s preferred core inflation metric – fell to 3.2% last month.

Economists surveyed by Bloomberg had predicted the gauge would slip to 3.3% in November.

That helped cement investor expectations for earlier and deeper interest rate cuts next year, despite pushback from several Fed policymakers this week.

Swaps traders are betting interest rates will be eased by more than 150 basis points in 2024, double the Fed’s forecast.

Global bonds were primed for another win as of Thursday, data compiled by Bloomberg show. Treasuries also eked out another advance this week.

Treasuries were mixed in Friday trading with the yield on the U.S. 10-year bond hovering around 3.9%. Still, U.S. bonds booked a fourth-straight week of gains – the best winning streak since March.

“We’ll argue the market was biased for a downside surprise which has translated to a somewhat counterintuitive price response” Ben Jeffery of BMO Capital Markets wrote after Friday’s PCE data.

“We expect the proximity to the early close and long weekend will usher in a long winter’s nap for Treasuries.”

Additional reports Friday showed consumers were also gaining conviction that inflation in the world’s largest economy was on the right track.

At the same time a reading on new-home sales in the U.S. unexpectedly tumbled, though it may only be a temporary setback for an expected housing market recovery.

The dollar steadied amid a weekly rout that had the greenback trading near five-month lows against its Group-of-10 rivals.

In commodities, oil prices posted their biggest weekly gain since October, as shippers took lengthy detours to avoid militant attacks in the Red Sea.