Some favorable earnings surprises balanced against discouraging inflation data left the major US equities indices mixed, with the S&P 500 Index recording its first weekly decline since the start of the year. The declines were concentrated in large-cap growth stocks, however, with an equally weighted version of the S&P 500 reaching a record intraday high on Thursday. Investors digested several upside inflation surprises during the week. On Tuesday, stocks sold off after US CPI data, up 0.3% MoM in January (vs. 0.2% expected). Core CPI rose 0.4% MoM, up 3.9% yoy, nearly double the Fed’s 2.0% target. Stock fell again on Friday  as PPI increased 0.3% in January—the most in five months—after falling 0.1% in December. Core prices rose 0.5%, well above expectations of around 0.1%. Stagflation fears reappeared on Thursday as retail sales plummeted 0.8% in January.

Most of the major US #equity indexes moved higher over the week, with the S&P 500 Index reaching new highs and breaching the 5,000 threshold for the first time. The advance remained relatively narrow, however, with an equally weighted version of the index significantly trailing the standard market-weighted version for the fourth time in five weeks. #Nvidia soared and is now worth as much as the entire Chinese stock market (represented by the H shares of the Hong Kong stock market). Market sentiment was helped by the solid reception given to the U.S. Treasury Department’s record $42 billion auction of 10-year notes. Shares in New York Community Bank plunged after the lender reported weak results in the wake of its acquisition of failed Signature Bank during early 2023’s regional banking turmoil.

US equity performance was mixed over the week as large-caps indices moved to intraday highs while small-caps and an equally weighted version of the S&P 500 Index recorded a modest loss. It was the busiest week of the Q4 earnings reporting season, with several releases from heavily weighted tech giants driving investors’ sentiment. Meta was the biggest winner of the week, up 20% on Friday. Meanwhile, Regional banks suffered their worst week since May 2023. On Wednesday, the Fed left short-term interest rates unchanged, as it was widely anticipated, but Fed Chair Jerome Powell stated that he didn’t think it’s likely that the Fed will cut rates in March. As a result, futures markets are now pricing in only a 20.5% chance of a rate cut in March, down from 47.7% the week before.

US stocks recorded another week of gains, bringing the Dow Jones and the S&P 500 Index to new all-time highs and marking the 12th weekly advance out of the last 13 for the latter. The gains were relatively broad, although the small-cap Russell 2000 Index remained nearly 20% below its all-time intraday high. More US macro data have been  beating estimates. The U.S. economy grew at a rate of 3.3% in Q4. The S&P Purchasing Managers Index (PMI) came in higher than expected, with the manufacturing PMI hitting 50.3 in January, well above expectations. US Treasury yields were all up on Friday but mixed on the week with the long-end underperforming. . Outside the US, the STOXX Europe 600 Index ended 3.1% higher on encouraging corporate results. The ECB kept its key interest rates unchanged at record highs and reiterated that monetary policy would stay at “sufficiently restrictive levels for as long as necessary” to bring inflation down to the 2% target.

US stocks ended mostly higher but the advance was narrow with technology stocks outperforming, helped by a rally in semiconductor shares. AI chip giant NVIDIA was particularly strong, as was rival AMD. On Tuesday, shares of Boeing fell sharply after the company reported earnings following an analyst downgrade. The week’s data offered some starkly different pictures of the economy’s health. On Tuesday, the New York Manufacturing index reached its lowest level since early in the pandemic. Conversely, Wednesday’s December retail sales numbers easily exceeded expectations, up 0.6% in October, with online sales growing 1.5% and hitting a new record high.

Stocks moved higher over the week. The Nasdaq Composite index surged over 3% on the week (best one since early Nov '23) while The Dow and Small Caps were unchanged (S&P closed up almost 2% on the week). Several tech giants recorded solid gains, including Facebook / Meta Platforms and chipmaker NVIDIA. Energy stocks underperformed as oil prices pulled back early in the week. US our largest banks—JPMorgan Chase, Citigroup, Bank of America, and Wells Fargo—reported fourth-quarter results on Friday. Data releases on the week’s light economic calendar came in roughly in line with expectations. US Headline core CPI rose 0.3% in December, a tick more than expected, but core CPI also rose 0.3%, in line with consensus.

Stocks gave back a portion of the past several weeks’ solid gains as investors appeared to rotate into sectors that lagged in 2023, including utilities, energy, consumer staples, and health care. Conversely, a slide in Apple shares following analysts downgrade weighed on the Nasdaq Composite Index. Trading volumes were relatively muted over much of the holiday-shortened week. Geopolitical concerns (Chinese president Xi speech on Taiwan, Red Sea tensions) appeared to weigh on sentiment as 2024 trading began. Macro data offered mixed evidence about the economy’s momentum heading into the new year. US labor market data generally surprised on the upside, although underlying trends were more mixed.

Global bond and stock markets added almost $20 trillion in capitalization during 2023 and all of that gain came in the last two months of the year. For the last week of 2023, the major equity indices were mixed. The S&P 500 Index marked its ninth straight weekly gain—its longest stretch since 2004—and briefly moved within 0.5% of its all-time intraday high. The week closed out a strong year for all the major indexes, led by the Nasdaq Composite, which recorded its sixth-biggest annual gain since the index was launched in 1971. As was widely expected, trading volumes and market moves were muted through most of the week, with trading closed Monday and many investors out of the office.

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.