Most Of The Major Indices Logged Another Winning Week.
The Dow Jones Industrial Average extended its winning streak to ten straight sessions highlighted by a sizable gain on Thursday, which was led by Johnson & Johnson, IBM, and Travelers following their earnings reports.
This week's trading featured a broadening out of buying interest. Mega caps were relative underperformers due to profit-taking activity and valuation angst ahead of a big week of mega-cap earnings that will feature results from Alphabet and Microsoft on Tuesday, and Meta Platforms on Wednesday.
Tesla and Netflix were top laggards, experiencing some consolidation following their better than expected Q2 earnings results. Taiwan Semiconductor Manufacturing Co. was another losing standout after warning about customers' continued inventory adjustment due to dampening end market demand. TSM also reported better than expected earnings and revenue.
Elsewhere, bank stocks outperformed following a slate of earnings news and commentary that did not imply any meaningful concerns about a recession. Starting with strong gains in Bank of America on Tuesday, Northern Trust, M&T Bank, Western Alliance, and U.S. Bancorp all logged nice gains after their earnings reports.
By and large, market participants continue to trade off the notion that the U.S. economy will avoid a hard landing, that the Fed is close to done raising interest rates, and that earnings growth will return in the second half of the year.
The soft landing view was corroborated by this week's economic releases. Weekly initial jobless claims came in at the lowest level (228,000) since Mid-May, which was good news regarding the state of the labor market. The retail sales report, meanwhile, looked weak at first with total sales declining 0.2%. Control group sales, which factor into the computation for personal spending in the GDP report, were up a solid 0.6%.
Housing data was more softish, but still didn't contain anything alarming. Total housing starts declined 8.0% month-over-month to a seasonally adjusted annual rate of 1.434 million and building permits decreased 3.7% month-over-month to a seasonally adjusted annual rate of 1.440 million.
With the soft landing narrative still intact, market participants were inclined to fade mega caps and buy and non-tech and value stocks. There is less valuation angst among those stocks, which led to the preferential treatment this week. The Russell 3000 Value Index rose 2.1% while the Russell 3000 Growth Index fell 0.5%.
The S&P 500 health care sector (+3.5%), boosted by Johnson & Johnson and Abbott Labs, and energy sector (+3.5%) saw the biggest gains. The communication services sector, meanwhile, was the top laggard by a decent margin, falling 3.0%.
There was an uptick in Treasury yields this week, yet the bond market is still respecting a multi-month trading ranging. The 2-yr note yield rose 13 basis points to 4.85% and the 10-yr note yield rose three basis points to 3.85%.
Nasdaq Composite: -0.6% for the week / +34.1% YTD
S&P 500: +0.7% for the week / +18.2% YTD
S&P Midcap 400: +1.2% for the week / +11.3% YTD
Russell 2000: +1.5% for the week / +11.3% YTD
Dow Jones Industrial Average: +2.1% for the week / +6.3% YTD