(New York) The year 2023 on Wall Street will have been that of a euphoric and unexpected rebound, accelerated in the last two months by the markets’ certainty that inflation is fading and the end of high interest rates is coming. profile in the United States.
On Friday, the indices concluded with a decline but not far from records, in a deserted market at the end of the year.
The Dow Jones index fell 0.05% to 37,689.54 points. The NASDAQ, with its strong technological coloring, fell by 0.56% to 15,011.35 points and the S
But for the year as a whole, buoyed by firm hopes that the economy will land softly after crushing inflation, the Dow Jones gained almost 14%.
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Finally, the NASDAQ soared by more than 43%, equipped with the “Magnificent Seven”, the mega-capitalizations of technology, such as Microsoft, Alphabet and Nvidia which notably benefited from the frenzy of the development of artificial intelligence.
“It’s been a great stock market this year,” commented David Kotok, investment director at Cumberland Advisors, interviewed by AFP.
Among the stars of the year, Tesla shares more than doubled from $113 to $248.48. Nvidia, the darling of the artificial intelligence sector, rose more than threefold, closing at $495.22.
Another most spectacular rise was that of the deferred payment specialist Affirm, five times its January level at $49.14.
However, the year saw “a rise in interest rates” from the American central bank (Fed), which is generally unfavorable for stocks because it makes business investments more expensive, but also “a mini-banking crisis, the strikes, and a worsening geopolitical situation,” recalled Art Hogan of B. Riley Wealth Management.
2023 began with expectations of a recession supposedly caused by tightening monetary policy “but it never materialized,” recalled Maris Ogg, portfolio manager for Tower Bridge Advisors.
“We started in fear of a recession and ended in complete euphoria with the idea that interest rates will fall. Now that the market has already taken all this into account, it could be much more dependent on company results in 2024,” she says, believing in a more difficult year ahead for corporate margins.
However, analysts are banking on average profit growth of 12% in 2024.
The brilliant performance of Wall Street, so far in any case, has hardly dazzled Americans who “continue to complain about the economy and who do not feel prosperous,” adds the expert from Tower Bridge Advisors.
Jobs are still plentiful, with only a 3.7% unemployment rate, and Americans’ real estate assets have further increased in value.
But “they find that the economy is not as good as it was a few years ago and that will undoubtedly handicap Joe Biden”, if he is the Democratic presidential candidate in the year next time, underlines Maris Ogg.
The octogenarian is at the lowest level of popularity compared to his predecessors in the White House less than a year before the election.
A Gallup poll in December showed only 39 percent of Americans approved of his action.
Wall Street’s enthusiasm has accelerated in the last two months with the sharp decline in interest rates on the bond market. They fell from 5% in October to 3.87% for ten years, in anticipation of a reorientation of the Fed’s monetary policy in the face of inflation falling to 3.1% (according to the CPI index in November).
This situation, however, concerns Steve Sosnick of Interactive Brokers.
“If rates have to fall that much,” that means supporting an economy that is becoming “problematic,” the analyst fears.
At the same time, Steve Sosnick thinks that the six rate cuts (by a quarter of a percentage point) the market is considering “are not realistic because the Fed doesn’t like to be too aggressive right before a presidential election.” “The central bank doesn’t want to be seen as supporting one side or the other,” he added.
Art Cashin, director of floor operations for UBS, believes that in 2024 it will be necessary to “be vigilant about the geopolitical situation”.