Dow Jones Extends Rally as Retail Sales Surge and Treasury Yields Fall
The Dow Jones Industrial Average continued its rally on Thursday, building on its record-breaking close above 37,000 for the first time ever. This surge was fueled by the 10-year Treasury yield dropping below 4%, and an unexpected increase in retail sales, providing investors with further confidence in a soft economic landing in 2024.
The Dow rose by over 100 points, representing a 0.3% increase, while the S&P 500 climbed 0.6%, and the Nasdaq Composite advanced 0.7%.
Fresh economic data released on Thursday contributed to optimism surrounding a smooth landing. The Commerce Department reported a 0.3% rise in retail sales for November, defying economists’ expectations of a 0.1% decrease as polled by Dow Jones. This increase indicates the resilience of consumer spending during the ongoing holiday shopping season.
Additionally, the 10-year Treasury note yield fell below 4% for the first time since August, as traders anticipated rate cuts in 2024. Lower interest rates further supported market confidence, resulting in the Dow’s remarkable 1% surge on Wednesday, surpassing the 37,000 milestone. This surge was prompted by the Federal Open Market Committee’s indication of potential rate cuts three times next year.
Michael Gapen, Chief U.S. Economist at Bank of America, commented on the Federal Reserve’s actions, stating, “The Fed delivered the dovish pivot that we expected heading into the December meeting. While we did not expect the Fed to move to an outright easing bias, we did expect it to move to a more balanced reaction function and, in the event, we think it did just that.”
In conclusion, the Dow Jones Industrial Average maintained its upward momentum, driven by positive economic indicators. The unexpected increase in retail sales and the decline in Treasury yields below 4% provided investors with renewed confidence in a favorable economic outlook for 2024. As market conditions evolve, monitoring these indicators will be crucial in assessing the future trajectory of the Dow and the overall market.
Source (CNBC)
