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.

The major US equity indexes ended mixed as investors weighed inflation data against dovish signals from Fed officials. Large-cap value stocks outperformed, helped by earnings beats from Citigroup, Wells Fargo, and JPMorgan Chase. The banking giants kicked off the unofficial start to Q3 earnings reporting season. The prospect of a widening war in the Middle East boosted energy shares and defense stocks while weighing on airlines and cruise operators. Investors’ sentiment appeared to get a boost at the start of the week, after Fed Vice Chair Philip Jefferson told an economics conference in Dallas that he was mindful that the rise in long-term bond yields might affect the need for future rate hikes.

The major US equity indexes closed mixed with a 1.6% weekly gain for the Nasdaq and a -0.3% decline for the Dow as Large-cap growth stocks sharply outperformed value and small-caps. An equally weighted version of the S&P 500 Index lagged its market-weighted counterpart by the largest margin since March. Similarly, the S&P 500 outperformed the small-cap Russell 2000 Index by the widest margin over the same period. The most important macro data of the week was the US payroll report on Friday. Employers added 336,000 nonfarm jobs in September, roughly double consensus estimates. The details in the jobs report offered a more nuanced picture, however, which appeared to foster a market rebound.

The worst month for S&P & Nasdaq since Dec 2022. Higher oil prices, higher yield and the increasing likelihood of a U.S. government shutdown continue to weigh on investors’ sentiment. The yield on the 10-year U.S. Treasury note peaked above 4.6% on Wednesday. However, yields ticked modestly lower after the release of encouraging eurozone and U.S. inflation data. The S&P 500 Index suffered a fourth consecutive weekly pullback. Within the index, utilities lost the most ground. Energy stocks, on the other hand, outperformed.

The Fed held its September meeting and the message from Jay Powell was clear: they will continue to keep rates elevated until inflation moves more convincingly toward 2.0%. The Fed held rates steady at 5.25% - 5.5% at this meeting but kept the option of an additional rate hike on the table, maintaining its outlook for a peak fed funds rate of 5.6%. The S&P 500 and the technology-heavy Nasdaq Composite reacted negatively, dropping 2.9% and 3.6% respectively. That marked the third straight negative week and worst weekly performance since March for each. As Vanda Research notes, inflows into the artificial intelligence (AI) sector continue to decline.