John Hancock: Weekly Market Recap Week Ended December 29

Bond market flip-flop

A year-end 2023 shift in the interest-rate outlook sparked a turnaround in the government bond market, which saw big price declines and spiking yields in 2021 and 2022 amid rising inflation. In 2023, the yield of the 10-year U.S. Treasury peaked in mid-October near 5.00%—the highest since 2007—but then fell sharply and ended 2023 at 3.88%—the same as 2022’s year-end yield.

Top-heavy market

The past year was notable for the concentrated nature of the U.S. stock market’s overall gains, as just seven mega-cap companies in the information technology, communication services, and consumer discretionary sectors did most of the heavy lifting. In 2023, those seven stocks collectively accounted for 62.2% of the total return of the entire S&P 500, according to S&P Dow Jones Indices.

Sector stories

The year saw wide disparities in U.S. equity performance at the sector level. Information technology and communication services were far and away the top-performing sectors, generating total returns of 57.8% and 55.8%, respectively. In contrast, two sectors generated negative results, with utilities at –7.1% and energy at –1.3%.

Jobs ahead

A labor market update due out on Friday is likely to be the most closely watched economic report in 2024’s opening week. The release covering December follows a better-than-expected November report that showed the economy generated 199,000 new jobs—above October’s jobs growth of 150,000 but below the 12-month average of 240,000.

Source: https://wmr.jhinvestments.com/