It Was A Strong Week, And First Quarter, For The Stock Market.
The S&P 500 spent most of the week above its 50-day moving average and climbed past the 4,100 level by Friday's close. The major indices stuck to a decidedly narrow range in the first half of the week, though, as investors weighed the latest developments in the recent banking sector fallout, which included a two-day Congressional hearing on the SIVB bank failure.
Participants reacted favorably to news that First Citizens Bancshares will acquire some of Silicon Valley Bank's assets along with a Bloomberg report indicating that authorities are considering expanding an emergency lending facility for banks in ways that would give First Republic Bank more time to shore up its balance sheet. Bank stocks remained under pressure, though, after FDIC Chairman Michael Barr told the Senate Banking Committee that he anticipates having to increase capital and liquidity standards for firms over $100 billion, adding that more regulation is needed.
Still, price action indicated that worries about the health of the banking sector had dissipated somewhat. The S&P 500 financial sector rose 3.7% this week, but it declined 6.1% in Q1.
Some of the gains this week were driven by relatively strong leadership from semiconductor stocks. The PHLX Semiconductor Index rose 3.5% this week and surged 27.6% this quarter. Investors initially reacted favorably to Micron's earnings report, but sold shares on Friday due to reports that Chinese regulators are conducting a cybersecurity review of MU products.
The rally really picked up steam on Friday after investors received relatively pleasing inflation data. Briefly, the PCE Price Index slowed to 5.0% yr/yr in February from 5.3% in January while the core-PCE Price Index, the Fed's preferred inflation gauge, dipped to 4.6% from 4.7%. The direction of these moves is a welcomed development, but the pace at which these indices are decelerating leaves a bit to be desired.
All 11 S&P 500 sectors logged gains this week. Energy (+6.2%), consumer discretionary (+5.6%), and real estate (+5.2%) were the top performer while communication services (+1.5%) and health care (+1.8%) showed the slimmest gains.
The 2-yr Treasury note yield rose 29 basis points this week to 4.06% and the 10-yr note yield rose 11 basis points to 3.49%.
The U.S. Dollar Index fell 0.6% to 102.52. On a currency related note, China and Brazil agreed to trade in their own currencies instead of the U.S. dollar.
Nasdaq Composite: +3.4% for the week / +16.8% YTD
S&P 500: +3.5% for the week / +7.0% YTD
S&P Midcap 400: +4.5% for the week / +2.3% YTD
Russell 2000: +3.9% for the week / +3.4% YTD
Dow Jones Industrial Average: +3.2% for the week / +0.4% YTD