Blog

By Ankur Banerjee and Alun John

SINGAPORE/LONDON (Reuters) -The dollar rose on the first trading day of the year, as attention turned to U.S. jobs data and European inflation numbers this week which may provide clues on central banks’ next moves, while bitcoin rallied.

The dollar index, which measures the U.S. currency against six rivals, was last at 101.55, up 0.17%. It fell 2% in 2023, snapping two years of gains as investors weighed the prospect of the Fed cutting rates this year.

On the other side of the dollar’s ascent was the euro which dipped 0.17% as traders digested data showing euro zone factory activity contracted in December for an 18th straight month.

The Japanese yen also struggled, with the dollar up 0.43% at 141.4 yen.

A slew of economic data is due this week including European inflation data and U.S. data on job openings and non-farm payrolls, which will help shape market expectations regarding monetary policy moves from the Fed and European Central Bank.

Markets are now pricing in an 86% chance of interest rate cuts from the Fed to start from March, according to CME FedWatch tool, with over 150 basis points (bps) of easing anticipated this year.

Minutes from the last Fed meeting in December are scheduled for release on Thursday and will provide further insight into the central bankers’ thinking.

“The positive sentiment from end-2023 may roll over into this week as all eyes turn to the U.S. jobs report on Friday,” said Nicholas Chia, macro strategist at Standard Chartered.

That sentiment was boosting commodities and stocks on Tuesday, and rippling across into currencies.

“2024 starts in positive mood in FX,” said Kenneth Broux senior strategist FX and rates at Societe Generale, pointing to commodity and stocks-associated gains in the Australian dollar – up 0.22% at $0.6825 – the Norwegian crown – slightly firmer at 10.16 per dollar – and, in emerging markets, the Mexican peso.

Rescue teams in Japan on Tuesday struggled to reach isolated areas hit by a powerful earthquake on New Year’s Day, with reports of almost 50 people dead in a disaster that toppled buildings and knocked out power to thousands of homes.

Sterling was last at $1.2724, flat on the day, having clocked its strongest performance since 2017 with a 5% gain last year, although a weakening economy and election uncertainty make a repeat performance unlikely.

The crypto world started the year with a bang, with bitcoin touching a 21-month peak of $45,532 on rising expectations that the U.S. Securities and Exchange Commission will soon approve exchange-traded spot bitcoin funds.

(Reporting by Ankur Banerjee in Singapore and Alun John in London; editing by Stephen Coates and Jason Neely)

By Ankur Banerjee

SINGAPORE (Reuters) -The dollar rose on the first trading day of the year as attention turned to economic data this week that may provide clues on the Federal Reserve’s next moves, while bitcoin surged above $45,000 for the first time since April 2022.

The dollar index, which measures the U.S. currency against six rivals, fell 2% in 2023, snapping two years of gains. It was last at 101.54, up 0.158%, as investors weighed the prospect of the Fed cutting rates this year.

The dollar’s ascent weighed on the Japanese yen the most, with the Asian currency down 0.54% at 141.63 per dollar, having slid 7% in 2023.

Rescue teams in Japan on Tuesday struggled to reach isolated areas hit by a powerful earthquake on New Year’s Day, with reports of more than 20 people dead in a disaster that toppled buildings and knocked out power to thousands of homes.

Markets are now pricing in an 86% chance of interest rate cuts from the Fed to start from March, according to CME FedWatch tool, with over 150 basis points (bps) of easing anticipated in the year.

“The question is when and how fast rate cuts will be delivered,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said in a note.

“Moderating price pressures and weaker growth impulses have seen the pendulum of market sentiment swing dramatically from the ‘higher for longer’ mantra of most of last year to pricing in aggressive easing” from central banks, Chandler said.

The focus now switches to a slew of economic data due this week, including the data on job openings and nonfarm payrolls. Minutes from the last Fed meeting in December are scheduled for release on Thursday and will provide insight into the central bankers’ thinking around rate cuts this year.

“The positive sentiment from end-2023 may roll over into this week as all eyes turn to the U.S. jobs report on Friday,” said Nicholas Chia, macro strategist at Standard Chartered.

At its December policy meeting, the Fed adopted an unexpectedly dovish tone and forecast 75 basis points in rate reductions for 2024.

That contrasted with other major central banks, including the European Central Bank (ECB) and Bank of England (BoE), which reiterated they will hold rates higher for longer.

Still, traders are pricing in 158 bps of cuts by the ECB this year, while the BoE is also expected to cut rates by 144 bps in 2024.

The euro was down 0.2% at $1.1022, inching away from the five-month peak of $1.11395 it touched last week. The single currency gained 3% last year, its first yearly gain since 2020.

Sterling was last at $1.27105, down 0.15% on the day, having clocked its strongest yearly performance last year since 2017 with a 5% gain.

Elsewhere, the Australian dollar was little changed at $0.68105. The New Zealand dollar was 0.3% lower at $0.6300.

The crypto world started the year with a bang, with bitcoin touching a 21-month peak of $45,511, up 3% on the day on rising expectations that the U.S. Securities and Exchange Commission would soon approve exchange-traded spot bitcoin funds.

========================================================

Currency bid prices at 0353 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1024 $1.1046 -0.20% -0.13% +1.1046 +1.1019

Dollar/Yen 141.5350 141.0450 +0.38% +0.38% +141.6600 +140.9400

Euro/Yen 156.04 155.66 +0.24% +0.26% +156.1600 +155.4500

Dollar/Swiss 0.8443 0.8416 +0.34% +0.34% +0.8448 +0.8409

Sterling/Dollar 1.2714 1.2730 -0.11% -0.08% +1.2735 +1.2710

Dollar/Canadian 1.3255 1.3245 +0.08% -0.01% +1.3256 +1.3224

Aussie/Dollar 0.6814 0.6810 +0.07% -0.04% +0.6822 +0.6803

NZ 0.6300 0.6319 -0.30% -0.30% +0.6323 +0.6295

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Ankur Banerjee in Singapore; Editing by Stephen Coates and Jacqueline Wong)

SINGAPORE (Reuters) – Bitcoin rose above $45,000 on Tuesday for the first time since April 2022 as the world’s biggest and best-known cryptocurrency started 2024 with a bang buoyed by optimism around possible approval of exchange-traded spot bitcoin funds.

Bitcoin touched a 21-month peak of $45,488, having gained 154% last year in the strongest performance since 2020. It was last up 2.6% at $45,344 but remains far off the record high of $69,000 it touched in November 2021.

Ether, the coin linked to the ethereum blockchain network, was 1% higher at $2,376 on Tuesday.

Investor focus has been squarely on whether the U.S. securities regulator will soon approve a spot bitcoin ETF, which would throw open the bitcoin market to millions more investors.

The U.S. Securities and Exchange Commission has rejected multiple applications to launch spot bitcoin ETFs in recent years, arguing that the cryptocurrency market is vulnerable to manipulation.

In recent months, however, there have been increasing signs that regulators are prepared to sign off on at least some of the 13 proposed spot bitcoin ETFs, with expectations that the decision will likely come in early January.

Rising bets that major central banks will cut interest rates this year has also been a boon for cryptocurrencies, helping shake off the gloom that had settled over crypto markets following the collapse of FTX and other crypto-business failures in 2022.

“The crypto market is set to experience notable growth this year, with key influencing factors being the influx of investment funds from spot ETFs, Bitcoin halving, and a more accommodative monetary policy both in the United States and worldwide,” said Jupiter Zheng, partner of liquid funds at HashKey Capital.

(Reporting by Ankur Banerjee in Singapore and Summer Zhen in Hong Kong; Editing by Jacqueline Wong)

By Ankur Banerjee

SINGAPORE (Reuters) – The dollar was steady on the first trading day of the year as traders weighed the prospect of steep interest rate cuts from the Federal Reserve in 2024 and looked to economic data this week for clues on the central bank’s next moves.

The dollar index, which measures the U.S. currency against six rivals, fell 2% in 2023, snapping two years of gains, and was last at 101.43, up 0.049% on Tuesday.

Markets are now pricing in an 86% chance of rate cuts to start from March, according to CME FedWatch tool, with over 150 basis points (bps) of easing anticipated in the year.

“The question is when and how fast rate cuts will be delivered,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said in a note.

“Moderating price pressures and weaker growth impulses have seen the pendulum of market sentiment swing dramatically from the ‘higher for longer’ mantra of most of last year to pricing in aggressive easing” from central banks, Chandler said.

The focus now switches to a slew of economic data due this week, including the data on job openings and nonfarm payrolls. Minutes from the last Fed meeting in December are scheduled for release on Thursday and will provide insight into the central bankers’ thinking around rate cuts this year.

At its December policy meeting, the Fed adopted an unexpectedly dovish tone and forecast 75 basis points in rate reductions for 2024.

That contrasted with other major central banks, including the European Central Bank (ECB) and Bank of England (BoE), which reiterated they will hold rates higher for longer.

Still, traders are pricing in 158 bps of cuts by the ECB this year, while the BoE is also expected to cut rates by 144 bps in 2024.

The euro was down 0.07% to $1.1036, inching away from the five-month peak of $1.11395 it touched last week. The single currency gained 3% last year, its first yearly gain since 2020.

Sterling was last at $1.2726, up 0.02% on the day, having clocked its strongest yearly performance last year since 2017 with a 5% gain.

Meanwhile, the Japanese yen weakened 0.24% to 141.20 per dollar to start the year on the back foot, having slid 7% against the dollar in 2023.

The spotlight is squarely on whether the Bank of Japan will exit negative interest rates in 2024, even as the central bank continues to stand by its dovish line. Tokyo markets are closed for a holiday, keeping volumes light on the day.

A powerful earthquake that hit central Japan on New Year’s Day killed at least six people, as authorities early on Tuesday reported bodies being pulled from the rubble of collapsed buildings.

Elsewhere, the Australian dollar was little changed at $0.6813, having ended 2023 broadly flat. The New Zealand dollar was 0.08% lower at $0.6314.

========================================================

Currency bid prices at 0104 GMT

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1039 $1.1046 -0.06% +0.01% +1.1046 +1.1035

Dollar/Yen 141.2200 141.0450 +0.13% +0.14% +141.3750 +140.9400

Euro/Yen 155.90 155.66 +0.15% +0.17% +156.0000 +155.4500

Dollar/Swiss 0.8423 0.8416 +0.11% +0.11% +0.8426 +0.8409

Sterling/Dollar 1.2727 1.2730 -0.04% +0.00% +1.2735 +1.2724

Dollar/Canadian 1.3236 1.3245 -0.06% -0.14% +1.3250 +1.3224

Aussie/Dollar 0.6819 0.6810 +0.12% +0.00% +0.6819 +0.6806

NZ 0.6317 0.6319 -0.08% -0.08% +0.6323 +0.6313

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Ankur Banerjee in Singapore; Editing by Stephen Coates)

By David Shepardson

WASHINGTON (Reuters) -Many electric vehicles lost eligibility for tax credits of up to $7,500 after new battery sourcing rules took effect on Monday, including the Nissan Leaf, Tesla Cybertruck All-Wheel Drive, some Tesla Model 3s and Chevrolet Blazer EV, the U.S. Treasury said.

The Treasury issued guidelines in December detailing new battery sourcing requirements aimed at weaning the U.S. electric vehicle supply chain away from China. They took effect on Monday.

The number of EV models qualifying for U.S. EV tax credits fell from 43 to 19. Those figures include different versions of the same vehicle type. Treasury said some manufacturers have yet to submit information on eligible vehicles, which could lead to changes in the list.

Tesla did not immediately comment Monday but said on its website “Cybertruck is likely to qualify for the federal tax credit later in 2024.”

The new rules allow buyers to claim the tax credit of up to $7,500 at a participating dealership at the point of sale. The tax credit sets limits on vehicle price and buyer income to qualify.

The Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit are among the vehicles that fell off the list of vehicles eligible for tax credits.

Volkswagen said on Monday it “is in the process of confirming eligibility for a federal EV tax credit for vehicles” after Jan. 1.

“We are optimistic that MY2023 ID.4s and all MY2024 ID.4s will be eligible under the new rules,” VW added.

BMW did not immediately comment.

Nissan said is working with suppliers in an effort to meet changing requirements “and regain tax credit eligibility for the Nissan Leaf in the future.”

The Treasury said “automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States.”

Ford Motor said last month its E-Transit would lose the $3,750 tax credit, as would the Mach-E and Lincoln Aviator Grand Touring plug-in hybrid, but its F-150 EV Lighting and the Lincoln Corsair Grand Touring retained credits.

General Motors noted all of its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding the Lyriq and Blazer EV are losing the credit because of two minor components.

GM expects after a sourcing change the Lyriq and Blazer EV will regain eligibility in early 2024 and said its Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV and Cadillac OPTIQ produced “after the sourcing change will be eligible for the full incentive.”

The 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models at the time.

Tesla disclosed in December its Model 3 Rear-Wheel Drive and Long Range vehicles would lose federal tax credits starting Jan. 1. The Model 3 Performance retains the $7,500 credit.

(Reporting by David ShepardsonEditing by Marguerita Choy and Lisa Shumaker)

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks closed modestly lower on Friday, the last trading day of 2023, capping a robust year-end rally as investors eyed easier monetary policy in the year ahead.

The stock market has seen remarkable upward momentum in the closing months of the year, powering all three major indexes to monthly, quarterly and annual gains.

For the year, all three posted double-digit growth.

“On January of this year, 363 days ago, if I said I think the S&P is going to gain more than 20% in 2023, you would have put me into the slightly nutty category,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “There’s certainly reason to be pleased this year and there’s reason for optimism going into 2024.”

Even so, all three major U.S. stock indexes ended the session lower.

“There’s really no reason for today’s small sell-off,” Pursche added. “There’s no news that’s driving it.”

“I would ascribe it to last-minute portfolio changes, profit taking as we enter the new year, and perhaps some rebalancing.”

Smallcaps came to life in the last months of the year, with the Russell 2000 roaring back from a year-to-date loss of 7.1% as of late October to end the year with a 15.1% annual gain.

The S&P 500, the Dow and the Nasdaq have booked nine consecutive weekly gains — the longest weekly winning streak for the S&P 500 since January 2004, and the longest for the Dow and the Nasdaq since early 2019.

The S&P 500 is still drifting within 1% of its record closing high reached on Jan. 3 2022. Closing above that level – 4,796.56 – would confirm the bellwether index entered a bull market when it touched its bear market trough in October 2022.

It was a tumultuous year marked by the U.S. banking crisis in March, an artificial intelligence stocks boom, oil supply jitters stemming from the Israel-Hamas war and fears that restrictive Fed policy could tilt the U.S. economy into recession.

Falling interest rates helped spark a remarkable year-end rally, which shifted into overdrive in December when the Federal Reserve opened the door to U.S. interest rate cuts in 2024 after a rate hike campaign that helped bring inflation down toward the central bank’s 2% annual target.

The Dow Jones Industrial Average fell 20.56 points, or 0.05%, to 37,689.54, the S&P 500 lost 13.52 points, or 0.28%, to 4,769.83 and the Nasdaq Composite dropped 83.78 points, or 0.56%, to 15,011.35.

Of the 11 major sectors of the S&P 500 real estate posted the largest percentage loss. Consumer staples and healthcare were the only gainers.

For the year, technology, communication services, and consumer discretionary were the outperformers, with utilities, energy and consumer staples losing ground.

Among corporate movers, Uber Technologies fell 2.5% and Lyft lost 3.5%, following a report that Nomura downgraded the ride-sharing platforms.

Markets will be closed on Monday, Jan. 1 for New Year’s Day.

Declining issues outnumbered advancing ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favored decliners.

The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 87 new highs and 53 new lows.

Volume on U.S. exchanges was 10.58 billion shares, compared with the 12.43 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by David Gregorio)

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks closed modestly lower on Friday, the last trading day of 2023, capping a robust year-end rally as investors eyed easier monetary policy in the year ahead.

The stock market has seen remarkable upward momentum in the closing months of the year, powering all three major indexes to monthly, quarterly and annual gains.

For the year, all three posted double-digit growth.

“On January of this year, 363 days ago, if I said I think the S&P is going to gain more than 20% in 2023, you would have put me into the slightly nutty category,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “There’s certainly reason to be pleased this year and there’s reason for optimism going into 2024.”

Even so, all three major U.S. stock indexes ended the session lower.

“There’s really no reason for today’s small sell-off,” Pursche added. “There’s no news that’s driving it.”

“I would ascribe it to last-minute portfolio changes, profit taking as we enter the new year, and perhaps some rebalancing.”

Smallcaps came to life in the last months of the year, with the Russell 2000 roaring back from a year-to-date loss of 7.1% as of late October to end the year with a 15.1% annual gain.

The S&P 500, the Dow and the Nasdaq have booked nine consecutive weekly gains — the longest weekly winning streak for the S&P 500 since January 2004, and the longest for the Dow and the Nasdaq since early 2019.

The S&P 500 is still drifting within 1% of its record closing high reached on Jan. 3 2022. Closing above that level – 4,796.56 – would confirm the bellwether index entered a bull market when it touched its bear market trough in October 2022.

It was a tumultuous year marked by the U.S. banking crisis in March, an artificial intelligence stocks boom, oil supply jitters stemming from the Israel-Hamas war and fears that restrictive Fed policy could tilt the U.S. economy into recession.

Falling interest rates helped spark a remarkable year-end rally, which shifted into overdrive in December when the Federal Reserve opened the door to U.S. interest rate cuts in 2024 after a rate hike campaign that helped bring inflation down toward the central bank’s 2% annual target.

The Dow Jones Industrial Average fell 20.56 points, or 0.05%, to 37,689.54, the S&P 500 lost 13.52 points, or 0.28%, to 4,769.83 and the Nasdaq Composite dropped 83.78 points, or 0.56%, to 15,011.35.

Of the 11 major sectors of the S&P 500 real estate posted the largest percentage loss. Consumer staples and healthcare were the only gainers.

For the year, technology, communication services, and consumer discretionary were the outperformers, with utilities, energy and consumer staples losing ground.

Among corporate movers, Uber Technologies fell 2.5% and Lyft lost 3.5%, following a report that Nomura downgraded the ride-sharing platforms.

Markets will be closed on Monday, Jan. 1 for New Year’s Day.

Declining issues outnumbered advancing ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.41-to-1 ratio favored decliners.

The S&P 500 posted 31 new 52-week highs and no new lows; the Nasdaq Composite recorded 87 new highs and 53 new lows.

Volume on U.S. exchanges was 10.58 billion shares, compared with the 12.43 billion average for the full session over the last 20 trading days.

(Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by David Gregorio)

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks softened on Friday, closing modestly lower on the last trading day of 2023 and capping a robust year-end rally as investors eyed easier monetary policy in the year ahead.

The stock market has seen remarkable upward momentum in the closing months of the year, powering all three major indexes to monthly, quarterly and annual gains.

For the year, all three posted double-digit growth.

“On January of this year, 363 days ago, if I said I think the S&P is going to gain more than 20% in 2023, you would have put me into the slightly nutty category,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “There’s certainly reason to be pleased this year and there’s reason for optimism going into 2024.”

“There’s really no reason for today’s small sell-off,” Pursche added. “There’s no news that’s driving it.”

“I would ascribe it to last-minute portfolio changes, profit taking as we enter the new year, and perhaps some rebalancing.”

Smallcaps came to life in the last months of the year, with the Russell 2000 roaring back from a year-to-date loss of 7.1% as of late October to end the year with a more than 15% annual gain.

The S&P 500 is still drifting within 1% of its record closing high reached on Jan. 3 2022. Closing above that level – 4,796.56 – would confirm the bellwether index entered a bull market when it touched its bear market trough in October 2022.

It was a tumultuous year marked by the U.S. banking crisis in March, an artificial intelligence stocks boom, jitters about Middle East oil supplies stemming from the Israel-Hamas war and fears that restrictive Fed policy could tilt the U.S. economy into recession.

Falling interest rates helped spark a remarkable year-end rally, which shifted into overdrive in December when the Federal Reserve opened the door to U.S. interest rate cuts in 2024 after a rate hike campaign that helped bring inflation down toward the central bank’s 2% annual target.

According to preliminary data, the S&P 500 lost 10.19 points, or 0.23%, to end at 4,773.16 points, while the Nasdaq Composite lost 80.71 points, or 0.53%, to 15,014.43. The Dow Jones Industrial Average fell 13.15 points, or 0.03%, to 37,696.95.

For the year, technology, communication services, and consumer discretionary were the outperformers among the 11 major S&P 500 sectors, with utilities, energy and consumer staples losing ground.

Among corporate movers, Uber Technologies and Lyft lost ground following a report that Nomura downgraded the ride-sharing platforms.

Markets will be closed on Monday, Jan. 1 for New Year’s Day.

(Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by David Gregorio)

One of the best investment strategies involves the Dogs of the Dow.

Every January, you simply buy the top 10, most beaten down, high-yielding names on the Dow Jones, cash out by year-end, and repeat the process the following January. Throughout the year, investors can profit from price appreciation, and receive dividends from some of the top, down, but not out, names on the market.

In 2023, for example:

• Verizon (VZ) – which has a current yield of 7.1% — fell from about $38 to $37.49
• Dow Inc. (DOW) – with a yield of 5.07% — jumped from $49.99 to $55.23
• Intel (INTC) – with a yield of 1% – ran from $26.72 to $50.39
• Walgreens (WBA) – with a yield of 7.22% – fell from about $37 to $26.60
• 3M (MMM) – with a yield of 5.47% – fell from about $120 to $109.69
• IBM (IBM) – with a yield of 4.05% – ran from $140 to $163.75
• Amgen (AMGN) – with a yield of 3.12% — ran from about $258 to $288.46
• Cisco (CSCO) – with a yield of 3.09% — jumped from about $47.48 to $50.48
• Chevron (CVX) – with a yield of 4.03% — fell from about $176 to $149.77
• JPMorgan Chase (JPM) – with a yield of 2.47% — ran from about $134 to $170.30

Six out of 10 isn’t bad at all. Plus, investors got to collect some great dividends. Now, as we head into New Year 2024, some of the top Dogs of the Dow to consider include:

• Walgreens Boots Alliance (WBA), which yields 7.22%
• Verizon (VZ), which yields 7.1%
• 3M (MMM), which yields 5.47%
• Dow (DOW), which yields 5.07%
• IBM (IBM), which yields 4.05%
• Chevron (CVX), which yields 4.03%
• Amgen (AMGN), which yields 3.12%
• Coca-Cola (KO), which yields 3.13%
• Cisco (CSCO), which yields 3.09%
• Johnson & Johnson (JNJ), which yields 3.04%

Another way to potentially profit from the Dogs of the Dow is by buying long-dated call options on each. Many will allow you to buy a call out to January 2025.

Or, investors can jump into a Dogs of the Dow-like ETF, with the Invesco Dow Jones Industrial Average Dividend ETF (DJD). With an expense ratio of 0.07%, the DJD ETF weighs its holdings according to the dividend. While the DJD was just as volatile as the markets were in 2023, it did see a respectable gain, running from about $42 in January 2023 to $46.10 today.

It’s just something to consider if you’re looking for opportunities in the market.

By Stephen Culp

NEW YORK (Reuters) -U.S. stocks softened on Friday, the last trading day of 2023, capping a robust year-end rally as investors eyed easier monetary policy in the year ahead.

The stock market has seen remarkable upward momentum in the closing months of the year, setting all three major indexes on course for monthly, quarterly and annual gains.

For the year, all three are set to post double-digit growth.

“On January of this year, 363 days ago, if I said I think the S&P is going to gain more than 20% in 2023, you would have put me into the slightly nutty category,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “There’s certainly reason to be pleased this year and there’s reason for optimism going into 2024.”

Even so, three major U.S. stock indexes were modestly lower on Friday as market participants prepared to shut the books on 2023 and head into the long holiday weekend.

“There’s really no reason for today’s small sell-off,” Pursche added. “There’s no news that’s driving it.”

“I would ascribe it to last-minute portfolio changes, profit taking as we enter the new year, and perhaps some rebalancing.”

Smallcaps came to life in the last months of the year, with the Russell 2000 roaring back from a year-to-date loss of 7.1% as of late October to notch what’s shaping up to be a 15% annual gain.

The S&P 500 is still drifting within 1% of its closing high reached on Jan. 3 2022. Closing above that level – 4,796.56 – would confirm the bellwether index entered a bull market when it touched its bear market trough in October 2022.

It was a tumultuous year marked by the U.S. banking crisis in March; an artificial intelligence stocks boom; the Israel-Hamas war; and fears that restrictive Fed policy could tilt the U.S. economy into recession.

Falling interest rates helped spark a remarkable year-end rally, which shifted into overdrive in December when the Federal Reserve opened the door to U.S. interest rate cuts in 2024 after a rate hike campaign that helped bring inflation down toward the central bank’s 2% annual target.

At 2:03PM ET, the Dow Jones Industrial Average fell 62.53 points, or 0.17%, to 37,647.57, the S&P 500 lost 14.27 points, or 0.30%, to 4,769.08 and the Nasdaq Composite dropped 66.26 points, or 0.44%, to 15,028.87.

Of the 11 major sectors of the S&P 500 real estate was down the most, while consumer staples stocks were the sole gainers.

For the year, technology, communication services, and consumer discretionary were the outperformers, with utilities, energy and consumer staples losing ground.

Among corporate movers, Uber Technologies and Lyft lost 2.4% and 2.8%, respectively, following a report that Nomura downgraded the ride-sharing platforms.

Markets will be closed on Monday, Jan. 1 for New Year’s Day.

Declining issues outnumbered advancing ones on the NYSE by a 2.42-to-1 ratio; on Nasdaq, a 2.33-to-1 ratio favored decliners.

The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 68 new highs and 46 new lows.

(Reporting by Stephen Culp; Additional reporting by Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by David Gregorio)