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.

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.