The S&P 500 and Nasdaq Composite indices have recorded their longest winning streaks in two years as investors bet that the U.S. Federal Reserve is done raising interest rates.
The benchmark S&P 500 index and technology-laden Nasdaq have each risen for seven consecutive trading sessions, their longest win streaks since Nov. 8, 2021.
The other major U.S. stock index, the blue-chip Dow Jones Industrial Average, has also posted gains for seven straight trading sessions, its longest win streak since July 26, 2023 when it rose for 13 consecutive trading days.
The S&P 500 is now up 15% year-to-date, while the Nasdaq has gained 31%, and the Dow has risen 3% on the year.
The latest bull run is a sharp reversal for U.S. equities, which had declined for three consecutive months from August through October.
Both the S&P 500 and Nasdaq had fallen into a correction, defined as a 10% decline from recent highs, by the end of October.
However, investor sentiment towards stocks has again turned bullish after the Fed held interest rates steady earlier in November, and as the yield on the 10-year Treasury bond has declined, dropping from a recent high above 5%.
Investor sentiment has also been buoyed by signs that the U.S. economy is beginning to slow, with the October jobs report showing weakness in the labour market.
Oil prices are also in retreat, giving stocks a lift. After climbing above $90 U.S. a barrel, crude oil price are back down below $80 U.S. after Chinese economic data raised demand concerns.
Futures markets are now forecasting four interest rate cuts by the Fed in 2024, the first of which is expected as early as May of next year.
Some analysts say U.S. markets are now in the beginning of a “Santa Claus rally,” which refers to the tendency of stocks to rise in the final two months of the year.
