New York: As expectations increased that the Federal Reserve would lower interest rates at the start of the upcoming year, US equities lost steam on the final trading day of the spectacular year, retreating from the all-time high levels reached earlier this week.
By Friday afternoon, all three indices were down, with the tech-heavy Nasdaq suffering from a drop in mega-cap firms as a result of the Mega Cap Index.
Several analysts have expressed concerns on the trajectory of the equity market in 2024, following impressive advances in the last months of this year. The expectation is that the Fed’s easing policy will reduce inflation in order to counteract price increases.
Sim Stovall, Chief Investment Strategist at CFRA Research, stated, “We anticipate a boost in investor confidence at the start of the new year.”
Additionally, according to Stovall, certain market players are trying to profit from the sell-off that may take place around the beginning of 2024.
The S&P fell on Friday after hitting a record-breaking streak and finishing at its highest level in January 2022. It will have successfully entered a bull market after battling the market correction that followed the bear market in October 2022 if it closes above this level.
The progress indicators for the first half of 2023 showed double-digit growth for both the monthly and three-month periods.
The Nasdaq beat its Wall Street counterparts, rising 43% this year as a result of the inclusion of mega-cap stocks and the quick development of artificial intelligence, while the Dow Jones hit a record high on Thursday.
There was roughly a 74% chance that policymakers will lower the Fed funds rate by 25 basis points in March, based on CME’s FedWatch tool.
More About Wall Street wanes
The Federal Reserve’s rate increased aggressively in 2023 before ultimately stopping in September. The Israel-Hamas conflict, the American banking crisis, the sharp increase in artificial intelligence reserves, and economic uncertainty all contributed to a rise in March that eventually made the case for a more accommodating approach.
The industry that saw the biggest gains in 2023—information technology—lagged behind on Friday with a loss of 0.5%.
The top two yearly gainers on the S&P 500, Nvidia and Meta Platforms, dropped by 0.8% and 1.4%, respectively.
The small-cap Russell 2000 index was 1.3% down, despite having had sharp increases during the previous two months.
Investors are calming down in preparation for the holidays. On Monday, January 1st, the markets will be closed in observance of the New Year.
At 12:05 ET, the S&P 500 was down 24.42 points, or 0.51%, at 4,758.93, the Nasdaq Composite was down 0.35% at 15,458.93 points, and the Dow Jones Industrial Average was down 132.87 points, or 0.35%, at 37,577.23.
Following a report that Nomura downgraded ride-sharing systems, Uber Technologies and Lyft suffered losses of 2.3% and 4%, respectively, in corporate moves.
Headline: Pakistan’s Inflation Hits 29.7% in December
As per the Pakistan Bureau of Statistics (PBS) data released on Monday, the headline inflation rate in Pakistan increased to 29.7% in December compared to the same month last year. This number is little higher than the 29.29% recorded in November. Monthly price increases were recorded, totaling 0.8%.
The average rate of inflation from July to December was 28.79%, up from 25.02% in the same period the previous year.
The rate of inflation is higher than anticipated by the government. According to the ‘Economic Update and Outlook’ report released by the Ministry of Finance last week, Pakistan’s Consumer Price Index (CPI) inflation rate for December is expected to range from 27.5-28.5% year over year.
The ministry anticipates that the outlook will stay at a reasonable level for the remaining months of the fiscal year 2024, notwithstanding the increase in administrative prices (gas prices).
The study ascribed this to a stable currency rate, taking into account elements like general demand, improved reserve positions, a slowdown in global commodity prices, and a strong economic base.
Experts blamed increases in the housing and utility indices for the 0.8% increase in inflation, with power costs accounting for 3.56% of the increase.
The brokerage house Top Line Securities added that because of the higher rates, the increase in electricity costs is greater than what the reading industry had anticipated.
“We expect a reduction in local fuel prices in the coming months, and the CPI inflation rate will remain lower between the high base effect of the previous year,” a note from an analyst said.
Local and National Inflation:
According to PBS, the annual percentage rate of change in the CPI for excess spending in December 2023 will rise to 30.9% from 30.4% in the previous month and 21.6% in December 2022.
In December 2023, it grew by 0.7% month over month, up from 0.3% in December 2022 and 4.3% in the preceding month.
In December 2023, year-over-year CPI inflation was 27.9%, down from 27.5% in the previous month and 28.8% in December 2022.
Compared to December 2022 and December 2022, when it climbed by 0.7% and 0.4%, respectively, in December 2023, it increased by 1.0%.
Predictions of State Bank:
According to expectations, the Monetary Policy Committee (MPC) of the State Bank of Pakistan last month kept the key policy rate at 22%. “”The recent effects of rising gas prices on inflation in November are taken into consideration in our decision.Â
which was relatively higher than the MPC’s previous expectations,” the statement reads. Although there have been notable gains, particularly in the availability of worldwide oil prices and improved
agriculture output.”
It went on to say, “Furthermore, the committee estimated that the real interest rate is positive based on the 12-month forward-looking basis and expects it to remain below inflation.”
As a result of lower overall demand, lower reserves, a moderating trend in global commodity prices, and a solid economic base, the MPC expects a notable dip in headline inflation in fiscal year 24’s second half.
For fiscal year 24, the State Bank has projected an average inflation rate of between 20 and 22 percent.
