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Weekly Recap | January 2, 2024

Weekly Recap | January 2, 2024

January 03, 2024
Weekly Recap

December 26-29, 2023 Recap

Ninth Straight Weekly Gain

Stellar Year for Stocks
All three major U.S. equity indices extended their late-year rallies to a ninth consecutive week, their longest winning streak since 2004. The S&P 500 ending 2023 just 0.56% shy of its January 2022 all-time high. There were no major changes in investor sentiment with overall bullish expectations remaining intact for a soft landing, backstopped by the Fed’s pivot toward 2024 rate cuts beginning as early as March.

For the Week…
The S&P 500 gained 0.34%, the Dow Jones Industrial Average rose 0.81% and the tech-heavy Nasdaq Composite gained the least, up 0.14%. Small caps backpedaled with the Russell 2000 slipping 0.28%. For the year, the S&P 500 surged over 26% while the Nasdaq Composite outperformed, up 44.6%. The Dow-30 gained the least, up nearly 16.3%.

Pending Home Sales Hold Steady
Overall pending home sales remained unchanged in November, missing forecasts for an 0.8% increase but this follows a revised 1.3% October decline (-1.5% originally reported). From a year ago, pending home sales are down 5.2%. Regionally, pending home sales rose on a month-over-month basis in the Northeast, Midwest, and the West, but declined in the South.

Weekly Sector Insights
Defensive stocks performed best last week, with Utilities (+1.21%), Consumer Staples (+1.11%) and Healthcare (+0.97%) taking top honors. Technology (+0.27%) gained the least while Energy (-1.37%) and Consumer Discretionary (-0.43%) lagged the most. Year-to-date, Technology (+57.84%) and Communication Services (+55.80%) were the top 2023 gainers, followed by Consumer Discretionary (+42.41%).

Treasury Yields Ease
The yield on 10-year Treasury notes slipped fractionally to 3.879%, from 3.895% the week prior. Remarkably, the 10-year Treasury yield almost exactly ended 2023 from where it started the year. Its yield ended 2022 at 3.878%. For the year, the yield on policy-sensitive 2-year Treasury notes fell just over -0.15% to end at 4.248%, its first yearly decline since 2020.

The Latest from @CeteraIM

Growth & Value Both Top 29% in 2023

Seismic 60/40 Performance

Consumer Sentiment Jumps in December

Economic Calendar

Monday, January 1
New Year’s Day, All Markets Closed.

Tuesday, January 2
S&P U.S. Mfg PMI (Dec final), Construction Spending.

Wednesday, January 3
Mortgage Activity, ISM Mfg Activity, JOLTS Job Openings, FOMC Minutes.

Thursday, January 4
Jobless Claims, Challenger Job Cuts, ADP Private Payrolls, S&P U.S. Services PMI.

Friday, January 5
Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings, Durable Goods Orders, ISM Services Activity.

Momentum is strong for stocks heading into 2024. Fundamentals are improving, but valuations are getting stretched for the S&P 500. The average forward 12-month P/E ratio over the last 20 years is 15.8. The S&P 500 is currently trading 19.7 times forward 12-month earnings.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA  92101.

Disclosures
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No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Glossary

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. 

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. 

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index. 

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. 

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. 

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. 

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years. 

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years. 

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity. 

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted. 

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index. 

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

 The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

 The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.