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Stocks continued their weekly winning streak—the longest since 2017. The S&P 500 Index briefly moved within 84 basis points of its all-time intraday high while the Nasdaq 100 Index and Dow Jones managed new records. Note that the Russell 2000 has gained 24% over the last 36 trading days, one of the biggest small cap rallies in history. Not all stocks gained; FEDEX stock is down -11% on the week as Q2 profits missed expectations. Nike is down -11% after missing sales estimates and cutting outlook. The global disinflation trend is gaining steam as inflation cools down more than expected in the U.S., UK, and Japan. In the US, the headline PCE index fell 0.1% in November, marking its first decline in 21 months, thanks to a sharp decline in goods prices.
The S&P 500 Index, Nasdaq Composite, and Dow Jones Industrial Average recorded their 7th consecutive week of gains—the longest streak for the S&P 500 since 2017. The gains lifted the first two benchmarks to 52-week highs and the Dow to an all-time record. Continuing a recent pattern, the week’s gains were also broadly based. The S&P 500 equal-weighted index outpaced its market-weighted counterpart by 131 basis points over the week. Small-caps also outperformed. The Cboe Volatility Index (VIX), the “fear gauge,” fell to its lowest level in the post-COVID era.
A late rally helped the major US equity indexes end flat to modestly higher for the week. The small-cap Russell 2000 Index outperformed the S&P 500 Index for the third time in the past four weeks, helping narrow its significant underperformance. Within the S&P 500, energy stocks lagged as domestic oil prices fell below USD 70 per barrel for the first time since June. On the Macro side, Friday’s nonfarm payrolls report surprised modestly on the upside, with employers adding 199k jobs in November versus consensus expectations of around 180k. The unemployment rate fell back to 3.7%. The bigger surprise was the University of Michigan’s preliminary gauge of consumer sentiment in December, which jumped to its highest level since August on calming inflation fears.
The major US equity indexes ended higher for the week, with the S&P 500 Index and Nasdaq rounding out on Thursday their best monthly gains (8.9% and 10.7%, respectively) since July 2020. Falling Treasury yields seemed to continue to boost sentiment, and a broad index of the bond market recorded its best monthly gain since 1985. On the macro side, inflation continues to cool down. In the US, the core personal consumption expenditures (PCE) price index rose 0.2% in October, a slowdown from September. The yoy increase is down to 3.5% — the lowest level since April 2021.
Stocks closed higher over a quiet holiday-shortened trading week (US markets were closed on Thursday due to the Thanksgiving holiday and closed early Friday). The big event of the week was Nvidia Q3 results. The stock fell despite the company beating earnings and revenue estimates as it issued cautious guidance because of export restrictions to China. Nvidia’s weakness was reflected in the underperformance of the Nasdaq over the week though growth stocks outperformed value stocks overall. On the Macro side, durable goods orders dropped 5.4% in October, which is the second-biggest decline since April 2020. Slowing growth signals and dwindling inflation fears may have contributed to strong demand for a USD 16 billion auction of 20-year U.S. Treasury bonds on Monday.
Soft US CPI sparks bonds & stocks buying spree The S&P 500 Index (+2.2%) built on its strong gains over the previous two weeks and moved above the 4,500 barrier for the 1st time since September. The week’s advance was notably broad, with the S&P 500 Index equally-weighted outperforming the S&P 500 by 1%. Value and small-cap indexes also outperformed. US Retailers earnings results were mixed; Target surged nearly 18% on Wednesday after beating consensus expectations while Walmart fell over 8% on Thursday, after it lowered guidance on increasing customer caution and falling prices for some goods. On Tuesday, the Labor Department reported that headline US CPI had remained unchanged in October, driven in part by a sharp drop in energy costs.
Big-Tech & Bitcoin Bid; Bonds & Bullion Battered The major US equity indexes finished mixed for the week. We note however that the S&P 500 Index came close to matching its longest winning streak in nearly two decades. Indeed, on Wednesday, the S&P 500 notched its eighth straight gain, while the Nasdaq marked its ninth. The market’s strength was exceptionally narrow, however, with an equally weighted version of the S&P 500 Index lagging its market-weighted counterpart by 190 basis points. Upside earnings surprises from some tech firms appeared to provide support to growth stocks. On Thursday, a $24 billion auction of 30-year U.S. Treasury bonds, which was met with the weakest demand in two years, triggered some profit taking on stocks as US Treasury yields climbed.
The #sp500 Index recorded its strongest weekly gain in nearly a year. Signs of a slowing economy and a rather dovish #FOMC meeting led to a sharp decrease in long-term bond yields. The gains were broad-based and led by the small-cap Russell 2000 Index, which scored its best weekly gain since October 2022. On Wednesday, the #Fed left rates steady, as expected, but investors appeared encouraged by the post-meeting statement, which signaled that the recent runup in long-term Treasury yields had achieved some of policymakers’ intended tightening in financial conditions. Friday’s US payrolls report seemed to confirm that the labor market was cooling. Employers added 150,000 jobs in October, below expectations and the lowest level since June, and September’s strong gain was revised lower.
US equities indices finished lower for a 2nd straight week, as market sentiment was dented by mixed corporate earnings reports, geopolitical tensions and concerns about rising bond yields. It was a busy week for quarterly earnings reports, with nearly a third of the S&P 500 Index due to report, including Alphabet, Microsoft, Meta and Amazon. Although most metrics reported by the companies showed solid growth and exceeded consensus expectations, markets seemed to pounce on indications of rising expenses, which weighed on shares. On the macro side, US real GDP grew at an annualized pace of 4.9% in Q3, led by strong consumer spending. Meanwhile, the core personal consumption expenditures (PCE) price index provided mixed evidence on whether inflation is moderating.
Geopolitical concerns, tough talk from Fed officials, and a rise in long-term bond yields to 16-year highs appeared to weigh on sentiment and drove the S&P 500 Index to its biggest weekly decline in a month. The Nasdaq fared worst among the major benchmarks and nearly moved back into bear market territory, ending the week 19.9% below its early-2022. Growth stocks lagged their value counterparts. Europe, Japan and China equities dropped sharply over the week. Stocks started the week on a strong note helped by limited negative news flow regarding the Middle East over the weekend. Deepening tensions later in the week appeared to drain the gains, however.
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