The Stock Market Closed Higher, Which Marks Its Tenth Week Of Gains In 11 Weeks.
The S&P 500, which briefly traded above its all-time high close on Friday, recovered all of last week's losses, leaving the index up 0.3% for the year.
Strength in mega cap stocks had an outsized impact on index performance.
The best performing S&P 500 sectors all house mega cap constituents. The information technology (+4.9%), communication services (+3.4%), and consumer discretionary (+1.5%) sectors saw the largest gains on the week. Meanwhile, the energy sector logged the steepest decline (-2.4%).
The financial sector was another underperformer, closing down 0.5% for the week. On a related note, the Q4 earnings reporting period started on Friday and included results from Bank of America, and Wells Fargo, JPMorgan Chase, and Citigroup.
Dow component UnitedHealth and Delta Air Lines were also among the notable names that reported earnings. Overall, quarterly results were met with negative reactions and set a tepid tone as participants look ahead to upcoming earnings results. Also, Microchip Technology issued a Q4 revenue warning that was tied to a weakening economic environment.
In other corporate news, Boeing sank 12.6% this week after 737 MAX 9 jets were grounded in response to a fuselage blowout on an Alaska Airlines flight.
This week's economic data painted a somewhat mixed picture. The Consumer Price Index (CPI) report for December was slightly hotter than the market's hopeful expectations and weekly initial jobless claims remain below recession-like levels. Meanwhile, the Producer Price Index was cooler than expected.
Market participants recalibrated rate cut expectations despite the generally mixed economic data, suggesting the market doesn't believe inflation is likely to reaccelerate. The fed funds futures market now sees a 79.4% probability of a 25 basis points rate cut at the March FOMC meeting versus a 73.2% probability yesterday and a 68.1% probability one week ago.
The price action in the Treasury market reflected this recalibration. The 2-yr note yield, which is most sensitive to changes in the fed funds rate, sank 24 basis points to 4.15%. The 10-yr note yield fell nine basis points this week to 3.95%.
In other news, geopolitical angst was piqued after the United States and the UK conducted strikes against military targets in Houthi-controlled areas of Yemen.
S&P 500: +1.8% for the week / +0.3% YTD
Nasdaq Composite: +3.1% for the week / -0.3% YTD
Dow Jones Industrial Average: +0.3% for the week / -0.3% YTD
S&P Midcap 400: +0.6% for the week / -1.9% YTD
Russell 2000: UNCH for the week / -3.8% YTD