Stocks Close Mostly Lower On First Trading Day Of Year, But Optimism High For A Bullish 2024  Image: Bigstock Stocks closed mostly lower yesterday with only the Dow eking out a small gain of 0.07%. The S&P was down -0.57% and the Nasdaq fell by -1.63%. We have a shortened trading week this week, which means we only have 3 trading days left. Last week's positive weekly close made it 9 up weeks in a row for the big three indexes. And there's still plenty of time left this week to see that streak continue. The so-called Santa Claus rally officially comes to a close today (it extends to the first 2 trading days in January). Whether we get any more mileage out of this remains to be seen. But whether we do or we don't, nothing can take away the spectacular Q4 rally we had last year, which topped off a spectacular year. Yesterday's PMI Manufacturing Index came in at 47.9, down from last month's 49.4 and views for 48.2. And Construction Spending was up 0.4% m/m vs. last month's upwardly revised 1.2% (from 0.6%) and the consensus for 0.6%. On a y/y basis it's up 11.3%.
Today we'll get MBA Mortgage Applications, the ISM Manufacturing Index, and the Job Openings and Labor Turnover Survey report (or JOLTS for short). But the jobs report everybody is really waiting for is Friday's always important Employment Situation report. The labor market has been incredibly resilient. It has cooled a bit recently. But still hotter than most anybody had expected when the Fed embarked on their historic rate hike campaign. The idea of a soft landing is looking more and more likely. In fact, we've been watching it unfold right in front of us. So all eyes will be on Friday's report to see if the soft landing scenario remains intact. Investors will also be watching today's FOMC Minutes. At the last Fed announcement, they paused yet again, and pretty much said they were done raising rates, assuming inflation doesn't start rising again. They also increased the number of rate cuts they're predicting to 3 vs. their previously forecast 2. Granted, traders are actually expecting anywhere for 4-5 this year, nonetheless, it marked an important change in the Fed's thinking about future rates and the acknowledgement that rates are likely to come down more than they had initially expected. That comes out at 2:00 PM ET. And that too will be watched closely, looking for any clues as to when those rate cuts might begin. There's plenty of optimism for another solid year in the market this year. Maybe not as hot as last year. But another double-digit rally seems very doable. Especially with inflation on the decline, and expected rate cuts. Not to mention the fact that year 4 of the 4-year Presidential cycle (that would be 2024), is the second-best year of all four years (the best year of the cycle is year 3, and that was 2023). The first trading day of 2024 is now behind us. And we have another 251 more trading days to go. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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