S&P 500 index is up 24 percent in 2023 as markets close for final time this year - in major boost for 401(K) savers
- Stocks have rallied this year after a rough 2022, in a surprise for investors
- The so-called Magnificent 7 stock companies have led the S&P 500 gains
- The Dow Jones and Nasdaq indices have also ended the year on highs
The S&P 500 index of America's biggest companies has ended the year up 24.2 percent, in a major boost for many 401(K) savers.
While stocks slipped slightly on the final trading day of 2023, it has been a surprisingly strong year of gains on Wall Street.
The so-called Magnificent 7 companies - Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla - accounted for about two-thirds of the gains in the S&P 500 this year, according to S&P Dow Jones Indices. Nvidia leads the group with a gain of about 240 percent.
Over the year, the Dow Jones Industrial Average also rose more than 13 percent, while the Nasdaq soared 43 percent.
Most 401(K) accounts have some or all of their money invested in the major benchmark indices, meaning that when they rally, Americans' retirement savings get a boost.
![The S&P 500 index of America's biggest companies has ended the year up 24.2 percent](https://i.dailymail.co.uk/1s/2023/12/29/21/79448467-12910861-image-a-56_1703886657641.jpg)
The S&P 500 index of America's biggest companies has ended the year up 24.2 percent
This means that someone with the average $140,000 in 401(K) savings could have seen their pot rise by almost $35,000 over the year if it was in the S&P.
This year's rally is welcome news for investors and retirement savers alike, after the major averages suffered in 2022.
The S&P 500 gave up 19 percent last year, and the Dow Jones Industrial Average shed 8.8 percent.
The S&P 500 index fell 0.3 percent Friday and is sitting just below the all-time high it set in January of 2022.
'Momentum continues to remain favorable heading into year end,' Mona Mahajan, senior investment strategist at Edward Jones, told CNBC.
'It's been quite a phenomenal run over the last eight weeks or so for the S&P 500, so I’m not surprised to see a little bit more moderation in pace the last few days.'
All the major indexes are on track to notch their ninth consecutive winning week, with the S&P 500 up 0.4 percent.
Investors in the US came into the year expecting inflation to ease further as the Federal Reserve pushed interest rates higher -with a trade-off of a weaker economy and potential recession.
![While stocks slipped slightly on the final trading day of 2023, it has been a surprisingly strong year of gains on Wall Street](https://i.dailymail.co.uk/1s/2023/12/29/22/79449403-12910861-image-a-63_1703887378446.jpg)
While stocks slipped slightly on the final trading day of 2023, it has been a surprisingly strong year of gains on Wall Street
But while inflation slowed to a 3.1 percent annual rate in November, the economy has chugged along thanks to solid consumer spending and a healthy job market.
The stock market is now betting the Fed can achieve a 'soft landing,' where the economy slows just enough to snuff out high inflation, but not so much that it falls into a recession.
As a result, investors now expect the Fed to begin cutting rates as early as March.
The Fed has signaled three quarter-point cuts to the benchmark rate next year. That rate is currently sitting at its highest level in 22 years - between 5.25 percent and 5.5 percent.
That could add more fuel to the broader market's momentum in 2024.
High interest rates and Treasury yields hurt prices for investments, so a continued reversal means more relief from that pressure.
Wall Street is forecasting stronger earnings growth for companies next year after a largely lackluster 2023, with companies wrestling with higher input and labor costs and a shift in consumer spending.
The yield on the 10-year Treasury was at 3.88 percent Friday from 3.85 percent late Thursday.
It surpassed 5 percent in October, but has been generally falling since then, easing the pressure on stocks.