The technology-heavy Nasdaq composite rose 24.60 points, or 0.2 per cent, to 15,099.18. It has outpaced other major indexes with a gain of 44 per cent this year.
“Consistent buying pressure of this magnitude is not only rare but a bullish sign for improving investor sentiment and market momentum,” said Adam Turnquist, chief technical strategist for LPL Financial, in a note to investors.
Overall, investors have been encouraged by reports showing inflation is on the decline even as the US economy appears stronger than expected.
Healthcare stocks and a mix of retailers had some of the strongest gains. Eli Lilly rose 1.9 per cent and Costco rose 1.1 per cent. US crude oil prices fell 1.9 per cent and weighed down energy stocks. Marathon Oil fell 1.2 per cent.
Markets in Europe and Asia gained ground.
Bond yields fell significantly. The yield on the 10-year Treasury, which influences mortgage rates in the US, fell to 3.79 per cent from 3.9 per cent late on Tuesday. Yields have been falling over hopes that inflation has cooled enough for the Federal Reserve to consider cutting interest rates in 2024.
Several biotechnology companies made big moves after giving investors updates on drug development. Cytokinetics surged 82.5 per cent on an encouraging study update for a potential heart condition treatment. Iovance Biotherapeutics shed 18.7 per cent after pausing a study on a potential lung cancer treatment because of a possible safety issue.
The New York Times rose 2.8 per cent after filing a federal lawsuit against OpenAI and Microsoft over copyright infringement, seeking to end the practice of using its stories without permission to train chatbots.
The final week of 2023 lacks any big economic updates. Overall, American investors have been encouraged by reports showing inflation is on the decline even as the economy appears stronger than expected. The Fed is walking a tightrope, seeking to slow the economy enough through high interest rates to cool inflation, but not so much that it tips the nation into recession.
Inflation in the US slowed to a rate of 2.6 per cent in November, according to a measure closely followed by the Fed. That’s down from 7.1 per cent in the middle of 2022 and edging closer to the US central bank’s target of 2 per cent inflation. Economic growth in the US has been steady since contracting in the middle of 2022 and sharply accelerated in the third quarter of 2023.
The data have raised hopes that the US economy will likely avoid a recession, or at least avoid a major one. They have also encouraged Wall Street to bet that the Fed is done raising interest rates and will likely shift to rate cuts in the new year. The central bank has held rates steady since its meeting in July, and Wall Street expects it to start cutting rates as early as March.
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