WEEKLY SUMMARY: S&P 500 winning streak stopped; Bitcoin hit $52k
Some favorable earnings surprises balanced against discouraging inflation data left the major US equities indices mixed, with the S&P 500 Index recording its first weekly decline since the start of the year. The declines were concentrated in large-cap growth stocks, however, with an equally weighted version of the S&P 500 reaching a record intraday high on Thursday. Investors digested several upside inflation surprises during the week. On Tuesday, stocks sold off after US CPI data, up 0.3% MoM in January (vs. 0.2% expected). Core CPI rose 0.4% MoM, up 3.9% yoy, nearly double the Fed’s 2.0% target. Stock fell again on Friday as PPI increased 0.3% in January—the most in five months—after falling 0.1% in December. Core prices rose 0.5%, well above expectations of around 0.1%. Stagflation fears reappeared on Thursday as retail sales plummeted 0.8% in January. Futures market ended the week pricing in only a 10.5% chance of a rate cut in March compared with a 65.1% chance a month earlier. The 10-year U.S. Treasury also surged to an intraday high of 4.33% on Friday, its highest level since December 1. The STOXX Europe 600 Index ended the week 1.39% higher as signs of cooling inflation and a better outlook for interest rate cuts cheered investors. In Japan, the Nikkei 225 Index gained 4.3% over the week. Financial markets in mainland China were closed for the week. Oil prices rallied for the 4th week of the last 5, with WTI back above $79 and its highest close since November...Bitcoin hit $52,000, its highest since November 2021.
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The Nasdaq Composite led gains, driven by strength in mega-cap tech firms benefiting from AI-related spending. Market gains were narrow — the S&P 500 rose even though most sectors fell, and the equal-weighted index lagged by 2.7%. About two-thirds of S&P 500 companies have reported earnings and 83% are beating expectations. Results from the “Magnificent Seven” were mixed: Microsoft, Apple, and Meta fell post-earnings, while Amazon and Alphabet rose. NVIDIA’s shares surged, briefly pushing its market value above $5 trillion. U.S. President Donald Trump and China’s President Xi Jinping agreed to a one-year trade truce, easing tensions between the two nations. The deal included U.S. tariff reductions, China suspending export controls on rare earths, and resuming purchases of U.S. agricultural goods. Meanwhile, the Federal Reserve cut interest rates by 25 basis points to 3.75%–4.00%, as expected, but signaled caution on further cuts.


