WEEKLY SUMMARY: Best week since November for S&P 500 & Nasdaq
Stocks recorded a 2nd consecutive week of gains as investors weighed key inflation data and quarterly earnings reporting season kicked off in earnest on Friday. The Nasdaq and growth-oriented sectors outperformed, helped by rebounds in some mega-cap technology-related names. Large US Investment banks (JPMorgan, etc.) beat consensus expectations 4th quarter earnings estimates but issued cautious outlooks. The good news of the week came from US CPI inflation data on Thursday. Headline prices fell 0.1% in December, a tick lower than expected and the first decline since May 2020. The drop brought the year-over-year gain to 6.5%, its lowest level since October 2021. Other macro data (jobless claims, consumer sentiment) suggested that the US economy remained relatively healthy even as inflation pressures eased—bolstering hopes that the Fed would manage a “soft landing.” The cooling inflation data helped the U.S. Treasury yields to continue trending lower, with the yield on the 10-year falling to 3.43% on Friday. Shares in Europe rallied for a 2nd consecutive week as early data suggest German economic growth stagnated in Q4. Eurozone jobless rate stays at record low; investor morale rises. In Asia, Chinese stocks continued to be bid. In Forex, the dollar suffered its worst week in 2 months, falling to its weakest since June. Gold surged above $1925 on Friday its highest since April 2022. Bitcoin is up 10 straight days (and 12 of last 13), topping $19,000 on Friday.