Last Updated on December 17, 2023 by Prakash Kolli
Stock Market This Week
Stock Market This Week – 12/16/23
The tenor of the market changed this past week because the U.S. Federal Reserve is probably done raising rates. They kept rates constant for the third meeting in a row. Further, Chairman Powell indicated that the Fed may lower rates in 2024. The dot plot, a graph of rate expectations from the committee, shows three decreases. In response, the market had one of its best days of the year and another excellent week.
Many people were sitting on the sidelines, fearing a recession yet to come. However, other investors were buying stocks, as seen by the robust returns in Technology and a few other sectors. Staying long in mega-cap tech stocks grew wealth.
From the perspective of dividend growth stocks, 2023 was challenging. Rising interest rates made bonds and risk-free cash savings more attractive. Consequently, investors focused there, causing the dividend yield of some sectors and individual equities to reach decade highs. It was a great time to buy because starting yields help determine future income streams.
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Stock Market Overview
Data from Stock Rover* shows that the stock market had yet another positive week, the seventh one in a row. However, some stocks are being sold off because of investors locking in gains. The Russell 2000 finished first, followed by the Nasdaq Composite, the Dow Jones Industrial Average (DJIA), and the S&P 500 Index.
All 11 sectors gained this week, and some did so significantly. The top performers were the Real Estate, Basic Materials, and Industrials sectors. However, the Consumer Defensive, Communication Services, and Utilities sectors were the worst performers. The Real Estate sector continues to rise because of falling interest rates.
After several declining weeks, oil prices climbed and finished the week at ~$72. However, demand remains weak, supply is strong, and the quantity in storage is robust. The VIX is still well below its long-term average. Gold resumed its upward trend and rose to $2,033 per ounce.
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![Stock Market Returns This Week](https://www.dividendpower.org/wp-content/uploads/2023/12/Stock-Market-Returns-This-Week-1.png)
The Nasdaq is performing the best for the year, followed by the S&P 500 Index, the Dow 30, and the Russell 2000. The Nasdaq and the S&P 500 are in a strong bull market, defined as 20%+ gain. The DJIA and Russell 2000 are both +10% year-to-date. In addition, nine of the 11 sectors have increased year-to-date. The three best-performing sectors are Technology, Communication Services, and Consumer Cyclical. But the worst-performing sectors are Healthcare, Energy, and Utilities. Lower interest rates are causing the Real Estate sector to rebound appreciably. Also, the Technology sector is turning in one of the most robust returns in years, with a +52% increase.
![YTD Stock Market Returns](https://www.dividendpower.org/wp-content/uploads/2023/12/YTD-Stock-Market-Returns-2.png)
![YTD Stock Market Returns](https://www.dividendpower.org/wp-content/uploads/2023/12/YTD-Stock-Market-Returns-2.png)
The dividend growth investing strategy has returned to positive results across all categories. All the categories now have positive returns for the year. The table below shows their performance by category.
Stock Market Valuation This Week
The S&P 500 Index trades at a price-to-earnings ratio of 26.07X, and the Schiller P/E Ratio is about 31.92X. These multiples are based on trailing twelve months (TTM) earnings.
The long-term means of these two ratios are approximately 16X and 17X, respectively.
The market is still overvalued despite the recent correction and a bear market and rebound. Earnings multiples of more than 30X are overvalued based on historical data.
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Prakash Kolli is the founder of the Dividend Power site. He is a self-taught investor, analyst, and writer on dividend growth stocks and financial independence. His writings can be found on Seeking Alpha, InvestorPlace, Business Insider, Nasdaq, TalkMarkets, ValueWalk, The Money Show, Forbes, Yahoo Finance, and leading financial sites. In addition, he is part of the Portfolio Insight and Sure Dividend teams. He was recently in the top 1.0% and 100 (73 out of over 13,450) financial bloggers, as tracked by TipRanks (an independent analyst tracking site) for his articles on Seeking Alpha.