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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.

The major US equity indexes ended mostly higher for the week, with the S&P 500 Index and Nasdaq Composite touching new highs. The market’s advance remained exceptionally narrow for the 2nd consecutive week, however, with an equally weighted version of the S&P 500 trailing its more familiar, capitalization-weighted counterpart by 2.15%. The AI euphoria continues to provide a continuing tailwind to tech-related stocks and growth shares, which outpaced value stocks by the largest margin since March 2023 (461 basis points). Another factor behind growth shares’ outperformance may have been reassuring inflation data and falling bond yields. US headline CPI inflation was flat in May for the first time in nearly two years.

The S&P 500 and Nasdaq Composite indices both reached record intraday highs during the week while small & mid caps pulled back. Growth stocks outpaced value shares by the widest amount since early in the year on the back of falling longer-term interest rates. The start of the week brought some downbeat economic readings (e.g ISM manufacturing below 50.0), which appeared to lead to a return of worries about “stagflation” among some investors. The picture brightened at midweek as the ISM’s services jumped to 53.8 in May, its highest level in nine months. The upside surprise in the official US jobs report on Friday morning didn’t lead to a negative market's reaction as it was tempered by an unexpected rise in the unemployment rate to 4.0%, its highest level since January 2022.

The main US equity indices closed lower over the holiday-shortened week but rounded out a month of gains. In contrast to much of the month, small-caps performed better than large-caps, and value stocks held up better than growth shares. The Nasdaq was especially weak, due in part to a sharp decline in cloud software provider Salesforce, which fell sharply after releasing Q1 revenues that missed consensus estimates. Much of the week’s relatively light economic calendar came in roughly in line with expectations. One prominent factor weighing on sentiment appeared to be the Treasury Department’s midweek auctions of five- and seven-year notes, which were met with subdued demand. The weak sales raised concerns that funding the U.S. deficit will drive up yields at a time when the Fed appears to be in no rush to cut rates.

After six straight weeks of 'weakness', US Macro Surprise data surged higher this week. But good (macro) news is not necessarily good news for markets. After four straight weeks of gains, The Dow suffered its worst week since March 2023. The Russell 2000 also saw its first weekly loss in the last five. The Nasdaq sharply outperformed on the week (hitting a new record) while the S&P managed to rally on Friday to get green for the week. Hawkish Fed Minutes spooked stocks midweek but NVDA's earnings saved the tech-heavy indices. After beating earnings consensus estimates, NVIDIA shares rose 9.3% on Thursday, adding roughly USD 220 billion to its market capitalization. The good news for NVIDIA did not translate into broader gains for the market.

The Dow Jones Industrial Average, S&P 500 Index, and Nasdaq Composite climbed to record highs during the week, with the Dow crossing the 40k threshold for the first time ever. As inflation and interest rate worries appeared to dissipate, growth stocks outperformed. The major factor supporting sentiment appeared to be Wednesday’s release of the US Labor Department’s April consumer price index (CPI), which came in at or modestly below expectations, in contrast to hotter-than-expected prints over the preceding three months. Thursday’s US retail sales figure was another boost for stocks as bad macro news seemed to be good news for the market (retail sales were flat in April versus consensus estimates of a 0.4% gain).

The S&P 500 Index is moving back towards its all-time high and recorded its third consecutive week of gains. The other major indexes also advanced, with value stocks generally outperforming growth shares. Market volumes were especially low over much of the week. A surprise rise in weekly jobless claims seemed to dominate the week’s economic calendar: unemployment benefits rose to 231,000 in the week ended the previous Wednesday, its highest since last August. Likewise, continuing claims broke a four-week downward streak and rose to 1.79 million.

After a volatile week, the main US equity indices ended in positive territory thanks to a strong rally on Friday after a softer-than-expected April jobs report boosted hopes that the Fed could start cutting interest rates soon. Overall, US data have been surprising on the downside recently and markets are now pricing in two full Fed rate cuts in 2024 and three more cuts in 2025. Over the week, growth stocks outperformed value shares and small-caps outpaced large-caps. It was the 2nd-busiest week of Q1 earnings reports and a positive reception to Apple’s earnings release after the close of trading on Thursday seemed to help drive a rebound in overall sentiment.

US equities managed to snap a string of three weekly losses. Earnings took center stage with the spotlight on the Magnificent 7 stocks. Despite the high bar, companies have so far been able to beat expectations, helping the S&P 500 recover half of its April losses. The Nasdaq outperformed, up 4% on the week (its best week since the start of Nov 2023), helped in part by strength in Apple and a late rebound in chipmaker NVIDIA. Shares in Google parent Alphabet also surged in the week following its announcement of better-than-expected Q1 earnings along with the company’s first dividend payment. The Dow was the laggard. On the Macro side, the US economy expanded at an annualized rate of 1.6% in Q1, well below consensus estimates of around 2.5% and the slowest pace of growth in nearly two years.

Stocks recorded broad losses, as concerns over tensions in the Middle East and the possibility of U.S. interest rates remaining “higher for longer” appeared to weigh on sentiment. Mega-cap technology shares lagged as rising rates placed a higher theoretical discount on future earnings. A Q1 revenue miss from ASML Holdings also seemed to weigh on the sector and on general optimism toward companies with AI-related earnings. Some strong economic data (e.g retail sales +0.7% vs. 0.3% expected) appeared to increase worries that the Fed would push back any interest rate cuts to the fall, if not to 2025. Conversely, downward surprises in housing market data may have furthered inflation fears by auguring continued supply tightness. As was the case last week, Fed officials expressed their concern with recent economic data.

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