U.S. stocks hit new highs, the biggest rise in two and a half years (REUTERS/Reuters)
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Data from The Conference Board shows consumers are more optimistic about the outlook for the stock market than they have been in more than two years. The report shows that 37.4% of respondents expect U.S. stocks to rise next year, the highest since July 2021 and higher than 32.9% in November.
U.S. stocks are rebounding strongly, with the Dow Jones Index (^DJI) hitting record highs for five consecutive days, and the S&P 500 Index (^GSPC) approaching its closing high of 4,797 points on Wednesday.
Overall, consumer confidence reached 110.7, the highest level since the S&P Index’s most recent high in July and the second-highest level in two years.
Dana Peterson, chief economist at the federation, said: “Consumer confidence rose in December, reflecting a greater sense of recognition of current economic conditions and job creation, as well as a less pessimistic outlook for the economy, job market and personal income over the next six months. .”
“The top issue affecting consumers remains overall rising prices, while politics, interest rates and global conflicts are no longer top of mind,” Peterson added.
Other key areas that consumers often focus on, such as the job market, continued to grow steadily in November. Meanwhile, natural gas prices recently hit lows this year, helping consumer optimism rebound.
“Confidence has been weakening for much of the second half of the year, which we believe has been driven by inflation fatigue, concerns that the economy will weaken further next year, worries about overspending in the summer, and the recent outbreak of war between Israel and Hamas, Thomas Simons, U.S. economist at Jefferies, wrote in a report on Wednesday.
“These are ongoing trends, but clearly consumers are much more optimistic about 2024 than we thought.”
Notably, optimism is rising, with consumers increasingly confident that interest rates will not rise in the coming year. Nearly one in five consumers expect an interest rate cut next year, with confidence reaching the highest level since October 2021.
Consumer sentiment is in line with recent market bets that the Fed’s next move will be to cut interest rates rather than raise them. According to the CME FedWatch tool, as of Wednesday morning, the market believed that a rate cut in March was 77% likely; a month ago it was 28%.
Wall Street is betting the Fed will change its tune. With inflation falling faster than expected and the job market solidifying with unemployment at historically low levels, Wall Street strategists and economists believe the ideal scenario would be for inflation to fall back to the Fed’s 2% target without tipping the economy into recession.
2023-12-21 09:00:00
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