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WEEKLY SUMMARY: S&P 500 index down 6 weeks in a row
It was another volatile week in Wall Street as the S&P 500 recorded losses for the sixth week in a row - the longest negative stretch since 2008. Investors appeared to grow increasingly skeptical that the Fed will be able to achieve a “soft landing” for the economy. At its low point on Thursday, the S&P 500 was down nearly 18% from its peak, well into correction territory but just above the -20% performance threshold that typically defines a bear market. US equities pared losses on Friday, helped by a rally in Tesla after Elon Musk tweeted that his deal to buy Twitter—partly funded by sales of a portion of his stake in Tesla —was “on hold.” On Wednesday, US inflation data weighed on sentiment as headline numbers fell back a bit from March’s pace but not as much as expected, rising 8.3% y/y versus consensus estimates of around 8.1%. The smaller-than-expected decline in consumer inflation caused a brief jump in the 10-year U.S. Treasury yield on Wednesday, but it ended sharply lower for the week as a whole and fell back below 3.0%. Shares in Europe rebounded from earlier weakness to finish higher, despite ongoing concerns about inflation and ECB’s Lagarde hinting at potential rate increase in July. Chinese stocks rallied as a fall in covid cases and reassuring comments from the securities regulator lifted investor sentiment. Cryptocurrencies crashed on the back of the Terra-USD stablecoin implosion, further suggesting a strong risk-off environment.
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US stocks recorded modest gains over the shortened trading week (markets were closed on Wednesday), with the S&P 500 hitting 5,500 intraday for the 1st time ever. The week also saw modest signs of rotation in the market, with value stocks outperforming growth as Nvidia suffered its first down-week in two months. Friday was a so-called triple-witching day, with roughly USD 5.5 trillion in options related to indexes, stocks and ETFs expiring. The start of the week brought some evidence of US economy easing with retail sales signalling less discretionary spending. But data released later in the week suggested that the economy was stronger than indicated by retail sales.