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WEEKLY SUMMARY: Stocks shook off latest bank fears
US equity returns varied widely over the week as banking industry and recession worries weighed on value stocks and small-caps, while large-cap growth stocks benefited from falling interest rates. Financials underperformed for a third consecutive week while the average stock remained significantly weaker than the S&P 500 Index’s return suggests. As was widely expected, the Fed raised rates by 25 basis points and the “dot plot” indicated that officials expected to stop raising rates after one more hike in May. References to ongoing rate increases were also removed from the official statement. On the macro side, the S&P Global’s Composite Index of both current services and manufacturing activity jumped from 50.1 to 53.3, indicating the fastest pace of private sector growth since last May, with new orders turning higher for the first time since September. The upside data surprises appeared to lift the yield on the benchmark 10-year U.S. Treasury note from a six-month intraday low on Friday morning, but the yield still finished modestly lower for the week. Shares in Europe gained ground, despite weakness in bank stocks. Chinese stocks rose on hopes that the country’s central bank will maintain an accommodative stance amid the global banking turmoil. Despite gold's appeal, it ended the week basically unchanged, rebounding from the early week losses and topping $2000 twice intraweek. WTI oil could not hold above $70. Cryptos were volatile.
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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.