How stock ownership and volatility will play out for 2024
The stock market has seen quite the rally towards the end of 2023, with inflation cooling and Federal Reserve leadership signaling rate cuts next year. In addition, according to the Fed's latest survey of consumer finances, more Americans are investing in the stock market than ever before, with 58% of American households holding stocks. Yahoo Finance Reporter Jared Blikre joins the Live show to break down the latest numbers with volatility (^VIX) and how it relates to stock market performance, as well as how more interest among American investors in the stock market -- and $6 trillion saved in cash -- could fuel more stock market gains.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Video Transcript
RACHELLE AKUFFO: Well, taking a look at stocks moving relatively flatly as we near the final trading days of 2023. After seven straight weeks of markets rallying, will stocks build on that momentum into year end? Joining us now with more is Yahoo Finance's own Jared Blikre. Hey Jared.
JARED BLIKRE: Hey Rachelle. And just take a look at what's supposed to happen in the month of December, lift off in the back half of the month. Well, that's where we are now. But you might correctly remember that we are in the midst of a nice rally. In fact, if I plotted what has already happened in December, it would look something like this. It would be over 3% for the S&P 500 basically off the charts there.
But if we do have historical norms interplay here, we should get additional rallies into the end of the year. There have been arguments that some of that has been brought forward already all the way back to Thanksgiving, but we see the incredible bullishness in the markets just continue.
And here's another way to look at. This is the S&P 500 average performance since 1950. This is the VIX average performance for the entire year going back to 1990. And we can interplay that with what's happened this year, that's in purple. And you can see into the end of the year-- and I've shown this chart quite a bit-- we do tend to see a depressed VIX and then we get a little bit of a pop there.
And it's worth remembering what happens in January because the Santa Claus rally that we talk about, that's actually the last five days of December and the first two trading days of January. And then we have something called the January effect and the first five days of trading.
Suffice to say that January is a very important bellwether for the entire year, there's a lot of political activity that's concentrated in the month of January. When we do have elections, new political officers and people in Congress come in January, we have the State of the Union, that didn't used to be until later in the year. So all of these things tend to concentrate in January, and that's why it just has such prognostication ability for the rest of the year.