The Market Logged Its Eighth Straight Week Of Gains Ahead Of The Extended Holiday Weekend.
That didn't alter the stock market's prevailing disposition, however. It was another winning week for the major indices, which were supported by some generally broad‐based buying interest.
The same factors that fueled the big run off late October lows were in play this week. Namely, a drop in market rates, an optimistic outlook on the economy, a fear of missing out on further gains, and an increase in speculative trading in the absence of concerted selling activity. The last factor drove the outperformance of the Russell 2000, which climbed 2.5% this week.
Gains were relatively broad‐based, leaving ten of the 11 S&P 500 sectors higher for the week. The lone sector that declined 1.3% was the rate‐sensitive utilities sector. Meanwhile, the communication services sector registered the biggest gain by a wide margin (+4.1%), benefitting from outsized gains in its largest components. Meta Platforms (META) jumped 5.5% this week and Alphabet (GOOG) increased 6.6%.
The next best performing sectors were the economically sensitive energy (+1.7%) and materials (+1.1%) sectors, reflecting the positive sentiment around the economic outlook.
Micron (MU) was an individual winner of note after better‐than‐expected earnings results and guidance. On the flip side, FedEx (FDX) and NIKE (NKE) both registered big losses on the week after disappointing with guidance. The overall market wasn't too worried about the disappointing guidance from some individual stocks, though.
Economic data remains consistent with a soft landing scenario for the economy. The November Personal Income and Spending report showed a healthy 0.4% increase in real disposable personal income, a 0.3% increase in real spending, and disinflation in both the PCE and Core PCE Price Indexes (the Fed's favored inflation gauge).
Housing starts were much stronger than expected in November, consumer confidence increased in December, and the level of initial claims is still a long way from being associated with levels registered during a recession.
Continued buying interest in the Treasury market was partially in response to economic data. The 2‐yr note yield settled ten basis points lower this week at 4.33%. The 10‐yr note yield declined two basis points this week to 3.90%.
Activity in the Treasury market was also supported by some safe‐haven trading after geopolitical angst was stirred this week. Specifically, several shipping companies, including BP, rerouted ships away from the Red Sea because of attacks on vessels by Houthi militants.
As a reminder, markets are closed on Monday for Christmas Day.
Nasdaq Composite: +1.2% for the week / +43.3% YTD
S&P 500: +0.8% for the week / +23.8% YTD
Russell 2000: +2.5% for the week / +15.5% YTD
S&P Midcap 400: +1.5% for the week / +14.7% YTD
Dow Jones Industrial Average: +0.2% for the week / +12.8% YTD