Stocks closed sharply higher on Friday and for the week. That makes it 2 weeks in row for the big 3 indexes. And they are now all higher for the year with the Dow up 0.46%, the S&P up 1.47%, and the Nasdaq up 2.00%.
Thursday's tech gains ignited a rally across the entire market on Friday. So much so that the S&P 500 finally eclipsed their previous all-time high from January 2022. It's been 2 long years since the S&P saw new highs. And that threshold was finally crossed on Friday.
This is important because history shows in the previous 14 times when the S&P has gone at least a full year without a new high, and then finally made one – a year later it was higher in 13 out of those 14 times, and up nearly 15% on average.
That bodes well for another stellar year again this year.
Let's also not forget the 4-year Presidential cycle shows that year 4 (that's this year), is the second-best year of all four years (second only to year 3 (last year), which is the best year of all four years).
And with inflation on the decline, and interest rates expected to do the same this year, the gains could be even more pronounced.
In other news, Friday's Existing Homes Sales report showed sales down -1.0% m/m. Although, the y/y rate improved to -6.2% vs. last month's -7.3% pace.
And Consumer Sentiment saw the index rise to 78.8, a 13% jump vs. last month's 69.7, and views for 69.2. Additionally, the year-ahead inflation expectations (which is part of the same report), eased to 2.9% vs. last month's 3.1%, and views for the same.
We've got a full docket of economic reports out this week.
But the report everybody is really waiting for is Friday's (1/26), Personal Consumption Expenditures (PCE) index, which is the Fed's preferred inflation gauge. While it's expected to show inflation on the decline, just the like the CPI and PPI reports did from earlier this month, it's the last important data point before the next FOMC announcement on January 31.
Nobody is expecting the Fed to cut rates this month, but everybody will be listening for any hint as to when they might begin.
Until then, the focus will be on earnings. And that's great news, since stocks typically go up during earnings season.
Earnings season officially kicked off last week.
Things start to heat up even more this week with another 441 companies on deck, including marquee names like Johnson & Johnson, Netflix, and Texas Instruments on Tuesday; Tesla, IBM, and ServiceNow on Wednesday; and Visa, Intel, and The Blackstone Group on Thursday.
While stocks got off to a slow start this year, they look like they are back to their winning ways, and have begun their next leg up.
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