Stocks Up For The 4th Week In A Row As Q4 Rally Continues  Image: Shutterstock Stocks closed mixed on Friday, but all of the major indexes closed higher for the week. That makes it 4 up weeks in a row for the Dow, S&P, and Nasdaq. Ever since stocks put in their correction lows in late October, they have been surging higher. The better than expected inflation reports from two weeks ago (CPI and PPI), both confirmed that inflation indeed is on the decline, underscoring the idea that the Fed may not need to hike interest rates any further after all. In fact, Fed Funds traders have placed a 95.5% probability that the Fed leaves rates unchanged yet again, for the third meeting in a row, when they meet on December 12-13. We will get one more look at inflation this week on Thursday, 11/30, when the Personal Consumption Expenditures (PCE) index comes out. That's the Fed's preferred inflation gauge. If the PCE index comes in anything like the CPI and PPI did (lower), that will only strengthen the likelihood that the Fed pauses yet again. And maybe even calls it quits. While last week's FOMC minutes showed that virtually nobody was interested in cutting rates anytime soon for fear that inflation would remain elevated or climb back up, that was consistent with what the Fed has been saying all along, i.e., higher for longer. But if the Fed indeed is finally done with their historic rate hike cycle, the conversation will finally shift from 'will they raise again,' to 'when will they finally begin cutting?' Regardless of when, the Fed has already hinted that they expect to cut rates by roughly -50 basis points in 2024.
Although, others like UBS recently suggested the Fed could cut rates by as much as -275 basis points next year (bringing the Fed Funds rate down to a midpoint of 2.63%). Pretty bold prediction. Whether it comes true or not is another story. But it shows that more and more people are expecting a bigger Fed pivot, and sooner too. Black Friday sales are in and it showed retail sales up 2.5% vs. last year. The online sales portion set a new record with $9.8 billion, which is up 7.5% from last year.
As good as those numbers sound, today is Cyber Monday, and is expected to set a record of its own with $12 billion in online sales, up 5.4% vs. last year, and retaining its moniker as the biggest online shopping day of the year. The Q4 rally, which was a month late in getting started, has wasted no time in racking up gains. So far, the Dow is up 5.62% for the quarter, with the S&P up 6.33%, and the Nasdaq up 7.80%.
With 5 more trading weeks to go in the year (and Q4 typically being the best quarter of the year), it looks like the Q4 rally has more upside to go. So make sure you're taking full advantage of it. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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