US stocks fall but end the year with big gains as traders look ahead to easier Fed policy in 2024

• Stocks ended the final trading session of the year lower but logged strong gains for the year.

• The S&P 500 stopped just shy of a new all-time high but gained 24% in 2023.

• Traders are laying bets that the Fed cuts interest rates as early as the first quarter of 2024.

US stocks finished the last trading of the session lower, with the S&P 500 failing to secure a new all-time high.

But on an annual basis, the stock market enjoyed a stellar performance this year.

The S&P 500 gained 24%, powered by resilient consumer spending, an economy that bucked calls for a recession, and steady corporate profits. The Dow Jones Industrial Average was powered higher, too, and the Nasdaq rode a wave of enthusiasm for artificial intelligence to finish the year 44% higher.

Stocks were volatile but moved steadily higher throughout the year. Some of the strongest gains came at the end of the year, as traders began placing bets that the Federal Reserve was about done raising rates and looking toward loosening monetary policy in 2024.

Following a series of encouraging inflation reports that showed price increases were slowing, Fed Chair Jerome Powell made a long-awaited nod to a policy pivot at the December meeting. Officials indicated that three rate cuts may be coming next year, but many big firms are predicting more than that.

On Friday, the 10-year Treasury yield inched up one basis point to 3.866%. It peaked in October, touching 5% for the first time since 2007.

Markets will be closed on Monday for the New Year’s holiday and will reopen on Tuesday.

Here’s where US indexes stood at the 4:00 p.m. closing bell on Friday: 

Here’s what else happened today: 

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In commodities, bonds, and crypto: 

• West Texas Intermediate crude oil fell 0.5% to $71.38 a barrel. Brent crude, the international benchmark, edged down 0.1% to $77.08 a barrel.

• Gold ticked down 0.4% to $2,075 per ounce.

• The 10-year Treasury yield ticked up one basis point to 3.866%.

• Bitcoin fell 1.25% to $42,006.

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