Market Recap - RATE CUT ENTHUSIASM DRIVES STRONG GAINS

The Stock Market Had A Strong Showing This Week, Which Drove The Three Major Indices To Fresh Record Highs.

The S&P 500 for its part closed above 5,200 for the first time with a 2.3% gain this week. The Nasdaq Composite jumped 2.9% and the Dow Jones Industrial Average gained 2.0%.

The gains were largely in response to the FOMC policy announcement. The committee voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%. This was expected and was not the reason for increased buying activity.

Buying increased due to the closely-watched dot plot, which is included in the updated Summary of Economic Projections (SEP), showing that the Fed still anticipates three rate cuts this year despite recent inflation readings coming in hotter than expected.

Fed Chair Powell's press conference following the FOMC policy announcement didn't deter the influx of buying. He largely reiterated prior comments, indicating that the Fed needs more evidence that inflation is moving toward the 2% target before cutting rates. Mr. Powell also said that it will be appropriate to slow the pace of asset runoff fairly soon.

Rate cut expectations moved up this week, contributing to the positive bias in the stock market. The implied likelihood of a June cut rose to 75.4% from 58.8% last week, according to the CME FedWatch Tool.

The price action in Treasuries also contributed to the positive bias in the stock market. The 2-yr note yield declined 12 basis point to 4.60% and the 10-yr note yield fell eight basis points to 4.22%.

Mega cap stocks had an outsized impact on index gains.

Only one of the S&P 500 sectors logged a decline -- real estate (-0.4%) -- while the communication services (+4.8%), industrials (+2.9%), information technology (+2.9%), and consumer discretionary (+2.8%) sectors saw the largest gains. 

• S&P 500: +2.3% for the week / +9.7% YTD

• Nasdaq Composite: +2.9% for the week / +9.4% YTD

• S&P Midcap 400: +2.3% for the week / +7.5% YTD

• Dow Jones Industrial Average: +2.0% for the week / +4.7% YTD

• Russell 2000: +1.6% for the week / +2.2% YTD

Market Recap - BUSY WEEK FUELS SHARP DECLINES

The Stock Market Closed With Solid Losses This Week. Market Participants Had A Lot To Digest On This Busy Week In Terms Of Market-Moving Events.

The added sticking point for the geopolitical angst, which was related to reports that Iran could soon attack Israel, was uncertainty related to the weekend and the potential that investors would not be able to react in real-time to any potential developments. 

The negative bias in the stock market began before the aforementioned reports, however. The market did not react favorably to a hotter than expected March Consumer Price Index (CPI). Total CPI increased 0.4% month-over-month versus an expected 0.3% increase and core-CPI, which excludes food and energy, increased 0.4% month-over-month versus an expected 0.3% increase.

The Producer Price Index (PPI) was cooler-than-expected on a month-over-month basis (actual 0.2%; expected 0.3%), but total PPI still accelerated to 2.1% in March from 1.6% in February.

These reports fueled worries about ongoing hawkishness from the FOMC and drove participants to rethink rate cut expectations. The probability of a rate cut at the June FOMC meeting collapsed to just 27.7% versus 69.3% one month ago. 

The market's expectations at the start of the year were for six rate cuts by the end of 2024, but the sudden change this week leaves the market with only two expected rate cuts now.

Treasury yields turned sharply higher in response to the data, and in response to a slate of weak Treasury auctions. There was a $58 billion 3-yr note auction on Tuesday, a $39 billion 10-yr note auction on Wednesday, and a $22 billion 30-yr bond auction on Thursday. 

The 10-yr note yield jumped 12 basis points to 4.50% and the 2-yr note yield, which is most sensitive to changes in the fed funds futures rate, jumped 15 basis points to 4.88%.

This week's losses follows a soft start to the Q1 earnings reporting period. JPMorgan Chase CEO Jamie Dimon made some cautious-sounding macro comments and the bank left its net interest income guidance for 2024 unchanged from its prior view. Citigroup and Wells Fargo also logged declines after their earnings results.

The weakness in bank stocks led the S&P 500 financials sector to decline 3.6% this week. It was the worst performer, but all 11 S&P 500 sectors logged declines. The real estate (-3.1%) sector was another top laggard, clipped by the jump in market rates. The materials (-3.6%) and health care (-3.1%) sectors also fell more than 3.0%. 

• Nasdaq Composite: -0.5% for the week / +7.8% YTD

• S&P 500: -1.6% for the week / +7.4% YTD

• S&P Midcap 400: -2.9% for the week / +4.3% YTD

• Dow Jones Industrial Average: -2.4% for the week / +0.8% YTD

• Russell 2000: -3.0% for the week / -1.2 YTD

Market Recap - CHOPPY START TO SECOND QUARTER AMID RISING RATES

The Stock Market Started The Second Quarter With Volatile Price Action Following A Strong Start To The Year.

Ultimately, the major indices settled with decent losses. The Dow Jones Industrial Average (-2.3%) and Russell 2000 (-2.9%) each fell more than 2.0% and the S&P 500 and Nasdaq Composite declined 1.0% and 0.8%, respectively. 

The downside bias was related to a sharp increase in market rates amid some solid economic data and sticky inflation figures. The 10-yr note yield jumped 12 basis points to 4.33% and the 2-yr note yield rose 10 basis points to 4.72%.

The February Personal Spending and Income report, released last Friday when markets were closed, showed some sticky inflation figures in the form of the PCE Price Indexes. Some of this week's data, which included the

March ISM Manufacturing Index and the March employment report, reflected ongoing strength in the economy. The March ISM Non-Manufacturing PMI and weekly jobless claims report showed some softening, though. 

Market participants were recalibrating rate cut expectations following this week's data and some commentary from Fed officials. Minneapolis Fed President Kashkari (not an FOMC voter) was among the Fed officials to draw attention, saying it's possible the Fed might not cut rates this year if progress on inflation stalls. The implied likelihood of a rate cut in June is now essentially a toss up, having fallen to just 52.4% from 60.4% one week ago.

Increased geopolitical tensions in the Middle East related to a potential retaliation by Iran against Israel also contributed to the negative bias this week, in addition to some normal consolidation efforts after the strong start to the year. 

Just about everything participated in this week's losses. Nine of the 11 S&P 500 sectors finished lower. The health care sector (-3.1%) saw the steepest decline after the CMS left its originally proposed payment rate increase for Medicare Advantage plans for 2024-2025 unchanged at 3.70% against expectations for an increase. The real estate (-3.0%) and consumer staples (-2.7%) sectors were also notable laggards. 

Meanwhile, the energy (+3.9%) and communication services (+2.5%) sectors were alone with gains at the end of the week.

• S&P 500: -1.0% for the week / +9.1% YTD

• Nasdaq Composite: -0.8% for the week / +8.2% YTD

• S&P Midcap 400: -1.9% for the week / +7.5% YTD

• Dow Jones Industrial Average: -2.3% for the week / +3.2% YTD

• Russell 2000: -2.9% for the week / +1.8% YTD

Market Recap - STOCKS HOLD STEADY AT RECORD HIGHS

The Major Indices Mostly Settled This Week Little Changed From Last Week, Except The Russell 2000, Which Continued Its Recent Outperformance And Jumped 2.5% This Week

There wasn't a big push to buy following solid gains last week, but importantly, there wasn't a big rush to sell either. The S&P 500 logged another record high close on Thursday ahead of the extended-holiday weekend.

Thursday's session was also the final trading day of the first quarter, which contributed to the muted index-level activity throughout the week due to the understanding that many stocks sit at or near all-time highs.

Bond and equity markets are closed on Friday for Good Friday, but there is still a slate of economic data to get through. The February Personal Income and Spending report, which features the Fed's preferred inflation gauge in the form of the PCE Price Indexes, will be released at 8:30 ET. Other data include the February advance goods trade deficit, advance Wholesale Inventories, and advance Retail Inventories at 8:30 ET.

Relative weakness in the mega cap and semiconductor spaces also played a role in limiting index-level moves this week. Some names in these spaces have exhibited a huge rise since the start of the year, so this price action reflected some normal consolidation activity.

The PHLX Semiconductor Index (SOX) fell 0.1% following news that China will not allow chips from AMD (AMD) and Intel (INTC) to be used in government computers.

Meanwhile, the equal-weighted S&P 500 jumped 1.6% this week. Only two S&P 500 sectors closed lower this week -- communication services (-0.8%) and information technology (-1.3%) -- while three sectors logged gains greater than 2.0%. The top performers were the utilities (+2.8%), real estate (+2.2%), and energy (+2.2%) sectors.

In corporate news, Dow component Boeing (BA) announced that CEO Dave Calhoun plans to step down as CEO at the end of 2024.

• S&P 500: +0.4% for the week / +10.2% YTD

• S&P Midcap 400: +1.8% for the week / +9.5% YTD

• Nasdaq Composite: -0.3% for the week / +9.1% YTD

• Dow Jones Industrial Average: +0.8% for the week / +5.6% YTD

• Russell 2000: +2.5% for the week / +4.8% YTD

Market Recap - RATE CUT ENTHUSIASM DRIVES STRONG GAINS

The Stock Market Had A Strong Showing This Week, Which Drove The Three Major Indices To Fresh Record Highs.

The S&P 500 for its part closed above 5,200 for the first time with a 2.3% gain this week. The Nasdaq Composite jumped 2.9% and the Dow Jones Industrial Average gained 2.0%.

The gains were largely in response to the FOMC policy announcement. The committee voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%. This was expected and was not the reason for increased buying activity.

Buying increased due to the closely-watched dot plot, which is included in the updated Summary of Economic Projections (SEP), showing that the Fed still anticipates three rate cuts this year despite recent inflation readings coming in hotter than expected.

Fed Chair Powell's press conference following the FOMC policy announcement didn't deter the influx of buying. He largely reiterated prior comments, indicating that the Fed needs more evidence that inflation is moving toward the 2% target before cutting rates. Mr. Powell also said that it will be appropriate to slow the pace of asset runoff fairly soon.

Rate cut expectations moved up this week, contributing to the positive bias in the stock market. The implied likelihood of a June cut rose to 75.4% from 58.8% last week, according to the CME FedWatch Tool.

The price action in Treasuries also contributed to the positive bias in the stock market. The 2-yr note yield declined 12 basis point to 4.60% and the 10-yr note yield fell eight basis points to 4.22%.

Mega cap stocks had an outsized impact on index gains.

Only one of the S&P 500 sectors logged a decline -- real estate (-0.4%) -- while the communication services (+4.8%), industrials (+2.9%), information technology (+2.9%), and consumer discretionary (+2.8%) sectors saw the largest gains. 

• S&P 500: +2.3% for the week / +9.7% YTD

• Nasdaq Composite: +2.9% for the week / +9.4% YTD

• S&P Midcap 400: +2.3% for the week / +7.5% YTD

• Dow Jones Industrial Average: +2.0% for the week / +4.7% YTD

• Russell 2000: +1.6% for the week / +2.2% YTD

Market Recap - Hot Inflation Data and Consolidation Efforts Lead to Losses

The Major Indices Settled With Relatively Modest Declines This Week.

Market participants received two inflation readings suggesting price pressures remain stubborn. Both the Consumer Price Index (CPI) and Producer Price Index (PPI) for February came in hotter than expected, but stocks seemed to large take this in stride.

The S&P 500 even reached a new record high on Tuesday following the hot CPI reading. This report didn't spook the market due to the notion that the largest factor in the increase -- the index for shelter -- will lessen in coming months. 

The relatively muted response in the stock market was due also to the notion that the Fed's policy decision on Wednesday may provide more clarity on how these reports factor into the Fed's thinking.

The Treasury market had a more pronounced response to the data. The 10-yr note yield jumped 21 basis points this week to 4.30% and the 2-yr note yield settled 23 basis points higher at 4.72%.

Other data this week included a February retail sales report that was a bit weaker than expected but still up nicely versus the prior month, and some initial and continuing jobless claims data that reflected ongoing strength in the labor market.

The modestly negative bias in the stock market was also related to a growing sense among some participants that stocks are due for a pullback.

Six of the 11 S&P 500 sectors logged declines. The rate-sensitive real estate sector was the worst performer by a decent margin, dropping 3.1%. The consumer discretionary sector was the next worst performer, declining 1.2%. Meanwhile, the energy sector saw the largest gain, jumping 3.7% and the materials sector registered a 1.5% gain. 

• S&P 500: -0.1% for the week / +7.3% YTD

• Nasdaq Composite: -0.7% for the week / +6.4% YTD

• S&P Midcap 400: +1.0% for the week / +5.1% YTD

• Dow Jones Industrial Average: UNCH for the week / +2.7% YTD

• Russell 2000: -2.1% for the week / +0.6% YTD

Market Recap - BUSY WEEK BRINGS MIXED PRICE ACTION

It Was A Busy Week In Terms Of Market-Moving Events And Price Action At The Index Level.

This buying left the Nasdaq Composite at a fresh all-time high by the end of the week. It was the last major index to reach a new record high in the uptrend that brought the S&P 500 and Dow Jones Industrial Average to new all-time closing highs earlier this year.

Market participants received earnings results from retailers like Target (TGT) and Costco (COST), and earnings from Broadcom (AVGO). The economic calendar was headlined by the February ISM Non-Manufacturing Index on Tuesday and February Jobs Report on Friday.

Also, Fed Chair Powell delivered his semiannual monetary policy testimony before Congress on Wednesday and Thursday, but this did not move the market as much as some aforementioned events and general consolidation activity. Mr. Powell reiterated the Fed's view that there is no rush to cut rates, but that it will likely be appropriate to cut rates later this year if the economy evolves as expected. There was also some positive buzz this week around the potential for the ECB to cut rates later this year like the Fed is expected to.

This week's economic data largely corroborated the market's thinking about rate cuts, and about a soft landing scenario for the market. The ISM Non-Manufacturing Index showed that business activity and order growth improved in February, but the Employment Index fell below 50.0%, indicating a contraction for the second time in the past three months.

The February jobs report showed nonfarm payrolls increased by a better-than-expected 217,000 following a downwardly revised 229,000 increase in January, the unemployment rate rose to 3.9% from 3.7%, and average hourly earnings growth was smaller than expected at 0.1% month-over-month.

A large driving factor for price action this week was general consolidation activity after a big run that had the major indices, and many individual stocks, sitting at all-time highs. Mega cap stocks and semiconductor-related shares, which led market gains on the way up, experienced profit-taking activity this week.

The broader market, aside from mega caps and semiconductor shares, enjoyed some buy-the-dip action in the latter part of the week.

Only three S&P 500 sectors logged declines, reflecting the underperformance of tech stocks and mega caps. The consumer discretionary sector logged the largest loss, down 2.6%, followed by information technology (-1.1%) and communication services (-0.7%). Meanwhile, the utilities (+3.2%), materials (+1.6%), real estate (+1.5%), and energy (+1.2%) sectors all registered decent gains this week. 

Treasuries settled the week with gains, digesting the economic data and rate cut implications from Fed Chair Powell's testimony. The 2-yr note yield declined four basis points this week to 4.49%. The 10-yr note yield declined nine basis points this week to 4.09%.

• S&P 500: -0.3% for the week / +7.4% YTD

• Nasdaq Composite: -1.2% for the week / +7.2% YTD

• S&P Midcap 400: +1.4% for the week / +6.1% YTD

• Dow Jones Industrial Average: -0.9% for the week / +2.7% YTD

• Russell 2000: +0.3% for the week / +2.7% YTD

Market Recap - WINNING WEEK LEAVES NASDAQ AT RECORD HIGH

This buying left the Nasdaq Composite at a fresh all-time high by the end of the week. It was the last major index to reach a new record high in the uptrend that brought the S&P 500 and Dow Jones Industrial Average to new all-time closing highs earlier this year.

The fact that the S&P 500 and Dow Jones Industrial Average had already reached fresh record highs this year, and the Nasdaq Composite was approaching its record close coming into the week, contributed to a growing feeling among some participants that stocks are due for a pullback. This notion drove the early lackluster price action as participants waited on market-moving events, including the Fed's preferred measure of inflation on Thursday in the form of PCE Price Indexes.

The Personal Income and Spending Report for January didn't contain any surprises and the PCE Price Indexes were in-line with expectations, showing year-over-year disinflation for the PCE Price Index to 2.4% (from 2.6%) and the core-PCE Price Index to 2.8% (from 2.9%).

This report alone was not the catalyst for the upside moves in the final few sessions of the week and garnered a muted response from investors. Importantly, though, the report did not force the market to rethink its rate-cut view for the year, which acted as a support factor for the market. 

The gains this week were largely driven by mega cap and semiconductor-related stocks, but many other stocks participated in upside moves. Shares of NVIDIA and Meta Platforms, for example, gained 4.4% and 3.7%, respectively. 

Dow component Salesforce was another winning standout after reporting earnings, jumping 8.2% this week.

Small cap stocks also outperformed the broader market, leading the Russell 2000 to gain 3.0%. 

The only S&P 500 sector to lose ground was health care (-1.1%) while the utilities (-0.6%), consumer staples (-0.5%), communication services (-0.3%), and financials (-0.1%) sectors saw relatively slim declines. The information technology sector, which constitutes 30% of the index, gained 2.5%. It was the best performer followed by the real estate (+2.1%) and consumer discretionary (+2.0%) sectors. 

Treasury yields declined this week, acting as added support for the stock market. The 2-yr note yield sank 19 basis points to 4.53% and the 10-yr note yield settled eight basis points lower at 4.18%. This price action followed a disappointing $63 billion 2-yr note auction and the $64 billion 5-yr note sale, and a solid $42 billion 7-yr note offering.

In corporate news, UnitedHealth lost ground on news that the Department of Justice has launched an antitrust investigation into the company, according to The Wall Street Journal. Apple is cancelling efforts to build an electric car and will focus on generative artificial intelligence, according to Bloomberg. Also, New York Community Bancorp acknowledged that it has identified material weaknesses in the company's internal controls related to internal loan review.

• Nasdaq Composite: +1.7% for the week / +8.4% YTD

• S&P 500: +1.0% for the week / +7.7% YTD

• S&P Midcap 400: +1.8% for the week / +4.6% YTD

• Dow Jones Industrial Average: -0.1% for the week / +3.7% YTD

• Russell 2000: +3.0% for the week / +2.4% YTD

Market Recap - S&P 500, DJIA HIT RECORD HIGHS AGAIN AFTER NVDA EARNINGS

The S&P 500 And Dow Jones Industrial Average Pushed Further Into Record Territory This Week And The Nasdaq Composite Shifted Back Into Rally-Mode.

Most of the action over this holiday-shortened week occurred on Thursday as participants reacted to another blowout quarter from NVIDIA (NVDA). NVIDIA's report renewed the market's enthusiasm for AI-related stocks, other growth stocks, and semiconductor shares.

NVDA surged 8.5% this week, topping a $2 trillion market-cap for the first time, and leaving its gain this year just below 60%. The PHLX Semiconductor Index (SOX) jumped 1.9%.

A fear of missing out on further gains was a powerful directional driver this week that added to the post-NVDA earnings rally. Even on Friday, when growth stocks and semiconductor shares underperformed, the broader market finished with a positive bias.

Notably, the information technology sector (+2.0%) was the second biggest gainer this week despite the jump in NVDA shares, trailing only the consumer staples sector (+2.1%). All 11 S&P 500 sectors registered gains this week, but the energy (+0.4%) and real estate (+0.9%) sectors still lagged index performance by a decent margin.

The market drew added support from ongoing optimism about rate cuts following comments from Fed officials. Fed Vice Chair Jefferson, who said this morning that it will likely be appropriate to begin cutting rates later this year, adding that he is cautiously optimistic about the way inflation is evolving. Also, Philadelphia Fed President Harker (not an FOMC voter) said he believes the Fed may be in a position to see the fed funds rate decrease this year, but cautions anyone looking for it right now and right away.

Market participants were also digesting the minutes for the January 30-31 FOMC meeting, which were scripted largely as expected. Fed Chair Powell effectively "wrote them" for the market when he conducted his press conference following that January meeting, and several Fed officials in the interim have paraphrased them.

The 10-yr note yield fell four basis points this week to 4.26% and the 2-yr note yield rose seven basis points to 4.72%. 

• S&P 500: +1.7% for the week / +6.7% YTD

• Nasdaq Composite: +1.4% for the week / +6.6% YTD

• Dow Jones Industrial Average: +1.3% for the week / +3.8% YTD

• S&P Midcap 400: +1.1% for the week / +2.8% YTD

• Russell 2000: -0.8% for the week / -0.5% YTD

Market Recap - MARKET STRUGGLES FOR DIRECTION AFTER SLATE OF ECONOMIC NEWS

The Stock Market Experienced Mixed Price Action This Week.

Tuesday's trade featured a broad, sharp retreat in response to a hotter than expected CPI (actual 0.3%; Briefing.com consensus 0.2%) and core CPI (actual 0.4%; Briefing.com consensus 0.3%) for January, which also sent Treasury yields sharply higher. By the end of the week, however, the major indices managed to win back a lot of that lost ground.

The Russell 2000, for example, sank 4% on Tuesday, but ultimately settled 1.1% higher on the week. The market-cap weighted S&P 500 declined 0.4% this week, but the equal-weighted S&P 500 jumped 0.7%. 

Only four of the 11 S&P 500 sectors closed lower than Friday while five of them climbed more than 1%. The heavily-weighted information technology sector saw the sharpest drop, down 2.5%, followed by the communication services sector, which fell 1.6%. On the flip side, the materials (+2.4%) and energy (+2.2%) sectors saw the biggest gains.

The stock market was not spooked by this week's slate economic data, holding onto to hope that inflation will continue to go the market's way, that the macroenvironment will remain strong, and that the Fed will cut rates sooner rather than later.

In addition to the hot CPI reading, market participants also digested a below-consensus Retail Sales report for January, an unexpected drop in jobless claims to 212,000, and a hotter-than-expected PPI report for January. The 2-yr note yield settled 15 basis points higher this week to 4.65% in response to this week's data and the 10-yr note yield rose 11 basis points this week to 4.30%.

Coming into the week, there was a growing sense among some participants that stocks were overbought in the short-term and due for some consolidation. The market has been on a huge run since late October that had the S&P 500 and Dow Jones Industrial Average near all-time highs coming into the week. 

The move off late-October lows has been paced by gains in the mega cap space, so it makes sense that some mega caps suffered outsized losses this week due to profit-taking activity. Amazon.com and Microsoft were losing standouts in the mega cap space, dropping 2.8% and 3.9%, respectively, this week. AMZN and MSFT and still up 11.6% and 7.5% in 2024. 

• Nasdaq Composite: -1.3% for the week / +5.1% YTD

• S&P 500: -0.4% for the week / +4.9% YTD

• Dow Jones Industrial Average: -0.1% for the week / +2.5% YTD

• S&P Midcap 400: +0.7% for the week / +1.7% YTD

• Russell 2000: +1.1% for the week / +0.3% YTD