S&P 500 closed higher on Friday (17 November 2023) and, with this, the index saw 3rd straight winning week in the hot rally seen in November. Index added ~0.13% to end at ~4,514.02. Dow Jones inched slightly higher by ~0.01%, or 1.81 points, and closed the session at ~34,947.28. Nasdaq Composite went up by ~0.08% to close the session at 14,125.48. In the week gone by, the gains were highlighted by the tame U.S. inflation data, giving some hope to the investors about the US Federal Reserve that they would end their campaign of rate hikes.
Stocks have been on the roll in November. Up until 17 November, S&P 500 went up by ~7.6%, while Dow Jones saw the gain of ~5.7%. Nasdaq grew by ~9.9%. Experts believe that the question “What will happen by the year end?” has been answered. They believe that the Wall Street should close the year with the bit of a rally. Now, the question on the investors’ minds is “What will happen in 1H24?” Are we going to see the rally in the mid-cap and small-cap space? Or the next year will also be dominated by the tech stocks? Like we saw in 2023!
Since Dow Jones inched slightly higher in the last day of the week, it appears that November’s equity rally significantly benefited one of the sectors- Technology. The month’s historically strong start resulted in strong multiple expansion in technology sector. As the result of this, the group is now trading at substantially increased premium to the long-term median P/E. Giant technology companies are among the few names which have seen their EPS estimates increasing. Shockingly, their stock prices are rising even at the faster rate. Therefore, the technology sector as a whole continues to trade at ~25% premium.
After Dow Jones inched slightly higher, global oil prices saw a bounce back on Friday. This happened after the major sell-off led the US crude moving into the bear market during the week. West Texas Intermediate contract for the month of December went up by ~$2.99, or 4.10%, to end at $75.89 per barrel, and Brent contract for January increased by ~$3.19, or 4.12% to end the session at $80.61 per barrel.
If we consider the earnings calls from the company’s chiefs, they are growing less concerned regarding the inflation. This means that their expenses are expected to be managed, which should help their profit numbers and, ultimately, their stock prices.