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WEEKLY SUMMARY: Tech saves the day while debate on rates continues
US equities managed to snap a string of three weekly losses. Earnings took center stage with the spotlight on the Magnificent 7 stocks. Despite the high bar, companies have so far been able to beat expectations, helping the S&P 500 recover half of its April losses. The Nasdaq outperformed, up 4% on the week (its best week since the start of Nov 2023), helped in part by strength in Apple and a late rebound in chipmaker NVIDIA. Shares in Google parent Alphabet also surged in the week following its announcement of better-than-expected Q1 earnings along with the company’s first dividend payment. The Dow was the laggard. On the Macro side, the US economy expanded at an annualized rate of 1.6% in Q1, well below consensus estimates of around 2.5% and the slowest pace of growth in nearly two years. Core PCE inflation continued to decline on an annual basis in March, if ever so slightly, falling to 2.82% from 2.84% in February, continuing a downward trajectory that began in October 2022. The 10-year U.S. Treasury yield ended the week near its highest level in almost six months. The pan-European STOXX Europe 600 Index snapped a three-week losing streak and ended 1.74% higher as some encouraging corporate earnings results helped to boost sentiment. The Nikkei 225 Index gained 2.3% while the yen continued to collapse (156). Gold was dumped - its worst week since the start of December 2023. After two down weeks, oil prices rallied, with WTI back above $83.
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US equities gave back a portion of the previous week’s gains, as uncertainty over the incoming administration’s policies appeared to continue driving the so-called Trump Trade. Financials and energy shares continue to benefit from hopes for deregulation and merger approvals. Likewise, the price of Bitcoin had surged by nearly a third since the eve of the election, as investors anticipated looser regulation of digital currencies. Conversely, health care shares fell sharply following news that Robert F. Kennedy, Jr., would be Trump’s nominee to head the Health and Human Services Department (HHS). On the macro side, yoy US headline inflation rose for the 1st time since March, from 2.4% to 2.6%. PPI data came in above expectations.