Stocks drift higher as a strong year winds down

Wall Street drifted to a slightly higher close as trading remained light on this holiday-shortened week.

With two trading days left in the year, the subdued activity in the market is capping off a broader rally to a strong finish. The Standard & Poor’s 500 is coming off its eighth straight winning week and is hovering just below its all-time high set in January 2022.

The S&P 500 rose 6.83 points, or 0.1%, to 4,781.58. It is up 24% for the year. The Dow Jones industrial average advanced 111.19 points, or 0.3%, to 37,656.52.

The technology-heavy Nasdaq composite rose 24.60 points, or 0.2%, to 15,099.18. It has outpaced other major indexes with a gain of 44% this year.

“Consistent buying pressure of this magnitude is not only rare but a bullish sign for improving investor sentiment and market momentum,” Adam Turnquist, chief technical strategist for LPL Financial, said in a note to investors.

Healthcare stocks and a mix of retailers had some of the strongest gains. Eli Lilly rose 1.9% and Costco rose 1.1%.

U.S. crude oil prices fell 1.9% and weighed down energy stocks. Marathon Oil fell 1.2%.

Markets in Europe and Asia gained ground.

Bond yields fell significantly. The yield on the 10year Treasury, which influences mortgage rates, fell to 3.79% from 3.90% late Tuesday. Yields have been falling on hopes that inflation has cooled enough for the Federal Reserve to consider cutting interest rates in 2024.

Several biotechnology companies made big moves after giving investors updates on drug development.

Cytokinetics surged 82.5% on an encouraging study update for a potential heart condition treatment. Iovance Biotherapeutics shed 18.7% after pausing a study on a potential lung cancer treatment because of a possible safety issue.

The New York Times’ shares rose 2.8% after the company filed a federal lawsuit against OpenAI and Microsoft over copyright infringement, seeking to end the practice of using its stories without permission to train chatbots.

The final week of 2023 lacks any big economic updates. Overall, investors have been encouraged by reports showing inflation is on the decline even as the economy appears stronger than expected. The Fed is walking a tightrope, seeking to slow the economy enough through high interest rates to cool inflation, but not so much that it tips the nation into recession.

Inflation slowed to a rate of 2.6% in November, according to a measure closely followed by the Fed. That’s down from 7.1% in the middle of 2022 and edging closer to the central bank’s target of 2%.

U.S. economic growth has been steady since the economy contracted in the middle of 2022 and sharply expanded in the third quarter of 2023.

The data have raised hopes that the economy will avoid a significant recession.

They have also encouraged Wall Street to bet that the Fed is done raising interest rates. The central bank has held rates steady since its meeting in July, and Wall Street expects it to start cutting rates as early as March.