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WEEKLY SUMMARY: Rotation and broadening are the new buzzwords
US equity indexes were mixed for the week, with small-cap and value stocks adding to their YTD leads over large-cap and growth-oriented shares. The Russell 2000 index advanced, reaching all-time high during the week, while large-cap indexes pulled back from the prior week’s record levels. Value stocks outpaced their growth counterparts for the third straight week. Q4 earnings season kicked off during the week with several big banks reporting Q4 results. JPMorgan Chase and Citigroup declined while shares of Morgan Stanley and Goldman Sachs rose on results that largely topped analysts’ forecasts. Contract chip manufacturer Taiwan Semiconductor Manufacturing reported a jump in Q4 profits, boosting sentiment around AI stocks. On the geopolitical front, President Trump outlined plans for a 10% cap on credit card interest rates and a proposed 25% tariff on imports from countries doing business with Iran. News that the DoJ was investigating Federal Reserve Chair Jerome Powell over his congressional testimony about renovations to the Fed’s headquarters reignited some investor concerns around Fed independence. On the US macro side, Core CPI cools in December while producer price growth ticks up. Short-term US Treasuries yields increased slightly, while long-term yields were marginally lower. Oil dipped while Silver soared. The dollar was volatile while bitcoin hit 2-months high. In international markets, Japan’s Topic soared more than 4% on news that Japan’s PM is preparing to call a snap general election in early February. European stocks recorded slight gains.
Have a great weekend
Charles & Syz Research Lab
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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.