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WEEKLY SUMMARY: Stocks down 3 weeks in a row, Gold at all-time-high
Stocks recorded broad losses, as concerns over tensions in the Middle East and the possibility of U.S. interest rates remaining “higher for longer” appeared to weigh on sentiment. Mega-cap technology shares lagged as rising rates placed a higher theoretical discount on future earnings. A Q1 revenue miss from ASML Holdings also seemed to weigh on the sector and on general optimism toward companies with AI-related earnings. Some strong economic data (e.g retail sales +0.7% vs. 0.3% expected) appeared to increase worries that the Fed would push back any interest rate cuts to the fall, if not to 2025. Conversely, downward surprises in housing market data may have furthered inflation fears by auguring continued supply tightness. As was the case last week, Fed officials expressed their concern with recent economic data. The retail sales data helped push the yield on the 10-year U.S. Treasury note to its highest intraday level since early November. The pan-European STOXX Europe 600 Index ended 1.18% lower as tensions rose in the Middle East. The Nikkei 225 Index was down 6.2%. Chinese equities rose after the economy expanded more than expected in Q1. Despite two major attacks in the Middle East, oil prices ended lower for the second week in a row. Some knock-on effects from an evaporation of hope for demand-sponsoring rate-cuts also weighed on sentiment. Gold closed the week at a new record high. Bitcoin was down, as geopolitical chaos weighed on sentiment ahead of the halving.
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The S&P 500 closed at a fresh all-time high on Friday, rising for a 5th consecutive week, its longest weekly winning streak since 2024. This brings the index up +15% since the March 30 low, also marking April as the best month for stocks since November 2022. Stocks largely shrugged off the stream of sometimes conflicting headlines about the war in the Middle East and a surprisingly hawkish Federal Reserve policy meeting to post solid gains in most major indexes. Large-cap stocks outpaced small-caps, and value outperformed growth. Five of the “Mag 7” companies reported earnings, with financial results generally meeting or exceeding expectations for these bellwether firms. Meanwhile, major central banks keep rates on hold amid war uncertainty.