Things got started on an upbeat note on Monday after a Wall Street Journal article over the weekend by Nick Timiraos highlighted the possibility of the Fed pausing its rate hikes this spring, along with a recent survey of businesses by the NABE that conveyed a lower possibility (56% vs nearly two-thirds before) of the U.S. being in a recession or entering one.
The market hit some turbulence on Tuesday with a lot of aberrant stock prices for a number of NYSE-listed stocks. The aberrations led almost instantly to volatility halts with market participants/observers wondering what was happening. The official explanation turned out to be an "exchange-related issue." That issue, fortunately, got resolved quickly and stocks soon returned to trading in a normal manner.
The NYSE declared a number of trades as erroneous from Tuesday morning and some trades were busted that traded outside of trading bands.
Market participants were also digesting some disappointing earnings/guidance from the likes of 3M, Verizon, Union Pacific, and General Electric, along with the news that the U.S. filed an antitrust lawsuit against Google over alleged dominance in digital advertising.
Defense-related companies Lockheed Martin and Raytheon Technologies reported pleasing quarterly results, which helped offset some weakness.
There was also an element of geopolitical angst in play midweek after Germany and the U.S. reached an agreement to supply tanks to Ukraine for its fight against Russia.
Price action on Wednesday was integral to keeping the rally effort alive this week. Valuation concerns following Microsoft's disappointing fiscal Q3 outlook and expected growth deceleration for its Azure business fueled a broad retreat to kick off the session.
Investors also had a negative reaction initially to results and/or guidance from the likes of Dow component Boeing, Texas Instruments, Kimberly-Clark, and Norfolk Southern while Capital One went against the grain after its earnings report.
Sentiment started to shift, however, when buyers showed up fairly quickly after the S&P 500 slipped below its 200-day moving average. Most stocks either narrowed their losses or completely recovered and closed the session with a gain.
Following Wednesday's strong reversal, Tesla reported strong quarterly results and outlook, which drove a continued rebound in the mega cap space, and Chevron announced a massive $75 billion stock repurchase program announcement.
There was also a slate of pleasing data releases Thursday morning that helped support a positive bias. Namely, the Advance Q4 GDP Report, weekly initial jobless claims, and December durable goods orders all came in better than expected.
The upside moves accelerated in the afternoon trade likely driven by some short-covering activity and a fear of missing out on further gains.
The rally effort continued on Friday despite Intel reporting ugly results and guidance, KLA Corp. issuing below-consensus guidance, Chevron missing on earnings estimates, and Hasbro issuing a Q4 profit warning.
Market participants received some relatively pleasing inflation data in the December Personal Income and Spending Report.
Briefly, the PCE Price Index was up 0.1% month-over-month (Briefing.com consensus 0.0%) while the core-PCE Price Index, which excludes food and energy, was up 0.3%, as expected. That left the year-over-year changes at 5.0% and 4.4%, respectively, versus 5.5% and 4.7% in November.
There was a sharp pullback ahead of Friday's close, however. Market participants most likely wanted to take some money off the table following a big run and ahead of a big week of market moving catalyst next week that will include, among other things, the FOMC decision, earnings reports from Alphabet, Meta Platforms, Apple, and Amazon.com, followed by the January Employment Report.
Only two S&P 500 sectors registered losses this week -- utilities (-0.5%) and health care (-0.9%) -- while the consumer discretionary (+6.4%), information technology (+4.1%), and communication services (+3.3%) sectors led the outperformers.
The 2-yr Treasury note yield rose one basis point this week to 4.21% and the 10-yr note yield rose four basis points this week to 3.52%.
· Nasdaq Composite: +4.3% for the week / +11.0% YTD
· Russell 2000: +2.4% for the week / +8.5% YTD
· S&P Midcap 400: +2.4% for the week / +7.8% YTD
· S&P 500: +2.5% for the week / +6.0% YTD
· Dow Jones Industrial Average: +1.8% for the week / +2.5% YTD