Dow Jones posts record close as stocks end mostly higher

What drove markets

Stocks briefly extended gains after the Treasury Department auctioned $58 billion in 5-year notes, prompting a further pullback in benchmark bond yields.

Market participants were hoping to see strong demand, much like what was seen for Tuesday’s sale of 2-year notes, Tom Essaye, founder of Sevens Report Research, said in a note.

A steady rally into the year’s end has further propelled the benchmark S&P 500 toward an all-time high. The Wall Street equity benchmark is striving for a ninth consecutive week of gains, which would be its best such winning streak since 2004, having jumped 24.4% so far in 2023.

See: The 10 days that moved the stock market the most in 2023

Investors have piled into stocks primarily on hopes that with inflation falling back near the Federal Reserve’s 2% target, the central bank will start reducing borrowing costs by the spring of 2024, all while the U.S. economy avoids a recession.

But that’s also prompted concerns that market participants have gotten ahead of themselves.

“The stock market is too optimistic about the quantity of rate cuts expected in 2024, and we may be borrowing some of 2024’s gains now as the year-end rally continues, because we don’t expect to see as many rate cuts as the market is currently predicting,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, a Punta Gorda, Fla.-based firm with $1 billion in assets under management.

“We expect to see three rate cuts in 2024 starting in July, and not any sooner than that unless something unexpected happens in the economy that warrants lower interest rates,” Landsberg said.

Tom Lee, head of research at Fundstrat Global Advisors, said his team leans toward markets continuing to rally in the last three trading days in 2023, given the strength of December already, which has seen the S&P 500 rise 4.5% so far this month.

“Given the trailing performance of fund managers, and the notion of ‘never short a dull market,’ we see the drift higher into the final days of 2023,” Lee said in a Wednesday client note.

Companies in focus

• Apple Inc.
  AAPL,
  +0.05%
  won a legal victory Wednesday when a U.S. appeals court temporarily blocked a government commission’s import ban on popular Apple Watch models following a patent dispute with medical-technology firm Masimo Corp. Apple shares rose 0.1%

• Shares of Cytokinetics Inc. 
  CYTK,
  +82.54%
  rose 82.5%, rallying after the cardiovascular-biopharmaceutical company announced positive results from a Phase 3 trial of aficamten, a treatment for hypertrophic cardiomyopathy.

• Iovance Biotherapeutics Inc.’s stock
  IOVA,
  -18.67%
   fell 18.7% after the cancer-therapy company said the U.S. Food and Drug Administration placed a clinical hold on its trial for IOV-LUN-202. 

• New York Times Co. shares
  NYT,
  +2.78%
  rose 2.8% after the media company filed a federal copyright lawsuit against Microsoft Corp. and ChatGPT creator OpenAI in a legal action expected to shape the debate over generative-artificial-intelligence technologies. Microsoft shares
  MSFT,
  -0.16%
  lost 0.2%.

Don’t miss: The best-performing stock of the year rose nearly 10-fold, while the second-best averted disaster to surge 1,000% in a wild 2023

Jamie Chisholm contributed.