The year-end rally is unfolding like a textbook (no one has ever imagined one so long - seven weeks - and so perfect), and annual records are falling day by day.

As a result, the Dow Jones and the S&P could well hit all-time highs by Friday, provided the Fed issues a final statement on Wednesday evening whose tone is perceived as "accommodative".
And in the very particular psychological state that has prevailed on Wall Street since October 27 (investors always see the glass as half full, whatever the context), everything will be a matter of interpretation.
And no matter how hard the Fed tries to temper Wall Street's optimism, the market hears no warnings and even thinks the opposite of what is being explained to it.

After a timid start to the session, and as happens day after day, over and over again, buyers take over, and prices surge higher at the end of the session: the S&P500 gains +0.5% to nearly 4.644 (+0.5% and a new annual record), as did the Dow Jones at 36,578, the Nasdaq Composite gaining +0.7% and the Nasdaq-100, +0.8% at 16,354.

The latter is now 2% away from its all-time record and only 0.5% away from a +50% over the past year, the second-best performance of the 21st century... with three sessions left until the '4 Witches', the year is not over. SOX components once again stood out, with Broadcom +4.2%, Nvidia +2.6%, AMD +2.4%, Zscaler +2.2%.

The adage "no surprise = good surprise" worked perfectly on Tuesday, after the release of November inflation figures deemed rather reassuring (at an annual rate of 4% on a core basis and +3.1% on a gross basis): this keeps hopes alive for future rate cuts.

Following this CPI in line with expectations, investors estimate the probability of a quarter-point rate cut in March at around 44%, according to CME Group's FedWatch barometer, versus around 42% the previous day. The FOMC is expected to leave interest rates unchanged this week, but its statement could provide some valuable clues as to its rate intentions.

Note, however, a continuing rise in housing costs, a component closely followed by analysts: this rise is linked to the drying-up of supply, as no one wants to re-borrow at 7% after having been able to buy with a 3.5% mortgage rate two years ago. So, there are no more sellers, and the solution for solvent buyers is to build a new home.

On the bond front, bond yields in the United States fell slightly (-3.5 basis points): the 10-year yield thus returned to 4.205%, compared with 4.24% the previous day.

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