Several upside inflation and growth surprises in the US pushed the S&P 500 Index to its worst weekly loss since early December. At its close on Friday, the index had surrendered roughly 35% of the rally that began in October, but it remained up 3.4% year to date. The Dow Jones Industrial Average is now in negative territory for the year, however. Growth stocks fell only modestly more than value shares.

US equities ended mixed as investors weighed some healthy growth and profit signals against worries that inflation trends might surprise on the upside. Fears that the Fed would need to raise short-term interest rates more than previously expected caused US Treasury yields to increase and fostered a rise in the U.S. dollar, taking an especially large toll on oil prices and energy stocks. US CPI rose 0.5% in January, as expected, versus a revised 0.1% increase in December.

The S&P 500 and Nasdaq Composite lost 1.1% and 2.4%, respectively, in what was their worst week since December. Energy stocks were the notable upside outlier and communication services shares the prominent laggard. Shares of Google parent Alphabet lost roughly USD 100 billion in market capitalization on Wednesday and fell roughly 10% for the week after Reuters reported that Google’s new artificial intelligence (AI)-based chatbot, Bard, mistakenly identified the first satellite to take a picture of an exoplanet in its first public demonstration on Monday.

Most of the US equity indexes extended their winning streaks into February, helped by some upside surprises in economic data and Q4 earnings reports, as well as some dovish signals from the Fed. The S&P 500 reached an intraday high of 4,195 on Thursday, its best level since late August. A 23% jump on Thursday in Meta Platforms (Q4 beat + positive outlook) provided a major boost to the Nasdaq.

Stocks resumed their winning streak on the back of some signals that the economy might avoid a recession in 2023. Consumer discretionary stocks were especially strong, thanks partly to a big jump in Tesla shares over the week following a favorable outlook. Defensive sectors (consumer staples, health care, and utilities) lagged. Value stocks underperformed growth shares.

The major US equity indexes ended mixed for the week and US Treasury yields fell as recession fears appeared to weigh on sentiment. The Dow Jones underperformed and gave back a portion of its year-to-date advance while the Nasdaq recorded a modest gain. Indeed, dampening inflation fears helped growth stocks to outperform, as the prospects of lower interest rates support their valuation multiples.

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.

An encouraging US jobs report pushed the major US equity indexes higher for the week – although we note that trading volumes were subdued. After a poor start of the week, Friday’s official payrolls report from the Labor Department appeared to turn sentiment back in a positive direction by raising hopes that the economy could be on its way to a “soft landing”.

The main US stock indices ended the last trading week of the year mostly lower in thin trading as the S&P 500 finished 2022 down nearly 20%. However, we note that the S&P 500 Index remained above its intraday low recorded the week before. Consumer staples and materials shares fell the most, while consumer discretionary shares were resilient, thanks in part to strength in Target and several other retailers.

The major US equities benchmarks were mixed in a week of generally quiet holiday season trading. Hawkish comments from the Fed and other global central banks over the previous week continued to be a key factor weighing on markets. Stronger than expected US GDP estimates (from 2.9% to 3.2%) and US weekly jobless claims surprising modestly on the downside intensified fears of future Fed rate hikes.