US stocks recorded solid gains for the week, with the S&P 500 Index breaching the 4,200 level in intraday trading for the first time since late August. The market’s advance remained notably narrow, however. The equal-weighted S&P 500 Index is up only 0.93% year-to-date, which is 825 basis points behind the weighted index. This dichotomy was again visible this week with outperformance by several mega-cap tech stocks (e.g Alphabet, Meta Platforms) as well as semiconductors such as NVIDIA and AMD. Regional bank shares also rallied and recouped some of their recent losses. Defensive sectors (consumer staples, health care and utilities) lagged. The catalyst for the week’s gains appeared to be a notable shift in tone around debt ceiling negotiations. Stocks lost momentum on Friday, however, after Republican negotiators announced that they had decided to “press pause” in discussions. Economic data were generally in line with consensus expectations with some notable surprises e.g Retail sales rose 0.4% in April, below expectations (1.6%) while Industrial production and unemployment claims beat. Comments from Fed Chair Powell on Friday were hawkish (“inflation remains far too high”). The yield on the 10-year U.S. Treasury notes rose sharply over the week. Shares in Europe advanced amid optimism that interest rates could be close to peaking and that the U.S. would avoid a debt default. Japan’s stock markets registered their sixth consecutive weekly gain, with the Nikkei 225 Index rising 4.8%.