US stock futures traded close to flat on Sunday night after the three major averages posted their seventh straight week of gains. The Dow Jones Industrial Average set a new intraday record and the Nasdaq 100 set a new closing high.
Futures linked to the Dow industrials gained 34 points, or 0.1%. S&P 500 futures were also up 0.1%, while Nasdaq 100 futures were up just 0.02%.
The winning streak for the S&P 500 marks its longest run of weekly gains since 2017. The broad market index is up 3.3% for the month, while the Dow and Nasdaq are up 3.8% and 4.1% respectively.
Investor sentiment took a positive turn last week after the Federal Reserve indicated it expects to cut short-term interest rates three times through 2024 amid cooling inflation.
“Slowing inflation, low growth expectations and intact growth momentum is a great combination from a market perspective. We’ve consistently argued that this is as close to a Goldilocks backdrop as you can get,” HSBC chief multi-asset strategist Max Kettner wrote in a note on Friday.
However, Kettner noted that near-term growth and earnings expectations in the US remain weak. The current winning streak looks similar to the 2017-2018 market rally, he added, where broadly bullish sentiment gave way to disappointment in January “due to the spike in implied equity market volatility”.
“So, for the first time in the second half of the year, we are starting to be cautious about the positive momentum. It may be prudent to start 2024 on a more cautious note,” says Kettner.
On the economic front, investors will be looking ahead to the results of the December PMI survey and housing market index. Monday marks the start of the last full trading week of 2023.
