Stocks were volatile this week with continued rotation in market leadership to small-cap and value shares. U.S. markets initially rallied to new-highs but faded toward week's end, led by weakness in the tech sector. The S&P 500 and Nasdaq closed lower on the week, while the Dow posted a solid gain. Value stocks outpaced growth stocks by 477 basis, as measured by Russell indexes—the largest divergence since March 2023. The week was also notable for a widespread global disruption to computer systems early Friday due to an error in a vendor’s security update to some users of the Microsoft operating system. A major factor in the underperformance of growth stocks was a sharp decline in chip stocks on Wednesday, following news that the Biden administration had told allies it was considering severe export curbs if companies such as Tokyo Electron and ASML Holding continued providing China with access to advanced semiconductor technology. The week’s economic calendar generally surprised on the upside (e.g retail sales). During a speech, Powell sees inflation and growth in “much better balance”. The US 10-year yield seemed to fall alongside inflation concerns over much of the week before spiking Friday in seeming reaction to worries over the Microsoft disruptions. The pan-European STOXX Europe 600 Index ended 2.68% lower amid rising trade tensions between the U.S. and China. Gold hit a new high before retreating. Bitcoin strengthened and is back to $67k.
Have a great week-end
Charles for the team