Market Recap - Market’s Winning Streak Comes To An End

This Holiday-Shortened Week Of Trading Saw The S&P 500 And Nasdaq Break Five And Eight Week Winning Streaks, Respectively.

Coming into the week, there was a growing sense that the market was due for a pullback, so losses were driven largely by normal profit taking activity after a big run.

Notably, mega cap stocks were still relative outperformers this week. One might have expected consolidation efforts to be focused more on mega caps, which have been leading all year. The market-cap weighted S&P 500 fell 1.4%. 

By the end of the week, concerns about global growth and the lag effect of rate hikes by central banks had entered the market narrative.

Fed Chair Powell said in his semiannual monetary policy testimony before the House Financial Services Committee on Wednesday that there could be two more rate hikes by the Fed before the end of the year if the economy performs as expected. This was followed by Fed Governor Michelle Bowman (FOMC voter) saying in a speech that "additional policy rate increases will be necessary to bring inflation down."

Fed Chair Powell continued his monetary policy testimony before the Senate Banking Committee on Thursday. He didn't provide any new surprises in terms of monetary policy views, yet there was consternation among committee members regarding capital requirements for banks. That understanding undercut the bank stocks this week.

Weak regional bank components, along with the growth concerns, led to the underperformance of the Russell 2000, down 2.9%.

Several central banks announced increases in their policy rates, including the Bank of England (+50 bps to 5.00%), Norges Bank (+50 bps to 3.75%), Swiss National Bank (+25 bps to 1.75%), and Central Bank of Turkey (+650 bps to 15.0%). Those moves stoked concerns about global inflation and the lag effects of rate hikes potentially impacting global growth.

Piling onto the growth concern narrative, preliminary June manufacturing PMIs for Japan, Germany, the UK, the eurozone, and the U.S. all came in below 50 (i.e. the dividing line between expansion and contraction).

Some economic data for the U.S. was also on the weaker side this week. Existing home sales declined 20.4% year-over-year in May while the Leading Economic Index declined for the 14th consecutive month. Also, weekly initial jobless claims remain elevated above 260,000.

Housing starts, though, came in really strong relative to expectations. Total starts surged 21.7% month-over-month to a seasonally adjusted annual rate of 1.631 million units -- the highest since April 2022 -- while total building permits rose 5.2% month-over-month to a seasonally adjusted annual rate of 1.491 million, aided by a 4.8% increase in single-unit permits. In response, homebuilders outperformed this week.

Only one of the S&P 500 sectors logged a gain this week -- health care (+0.2%) -- while the real estate (-4.0%), energy (-3.5%), and utilities (-2.6%) sectors saw the largest declines.

Separately, trading volume was extremely heavy on Friday due to the reconstitution of the Russell Indexes

• Nasdaq Composite: -1.4% for the week / +28.9% YTD

• S&P 500: -1.4% for the week / +13.3% YTD

• Russell 2000: -2.9% for the week / +3.4% YTD

• S&P Midcap 400: -2.5% for the week / +3.5% YTD

• Dow Jones Industrial Average: -1.7% for the week / +1.8% YTD

Market Recap - S&P 500 RISES FOR FIFTH CONSECUTIVE WEEK IN BROAD ADVANCE

This Week, Like Last Week, Featured A Bullish Bias. The Major Indices All Logged Decent Gains, Which Had The S&P 500 Close Above 4,400 For Its Fifth Straight Winning Week.

The Nasdaq for its part registered its eighth straight week of gains. Things got started on an upbeat note after Goldman Sachs raised its 2023 year-end S&P 500 price target to 4,500 from 4,000.

Mega caps were in a leadership role this week, which saw Apple and Microsoft each hit new all time highs. Small and mid caps stocks, meanwhile, trailed their larger peers after a big run recently. The Russell 2000 logged the slimmest gain among the major indices this week, up 0.5%, but shows the largest gain so far this month (+7.2%). 

Semiconductor stocks were a pocket of strength in the market. The PHLX Semiconductor Index (SOX) rose 4.2% despite recording losses on Thursday and Friday. 

Also, ten of the 11 S&P 500 sectors closed logged gains on the week. Energy (-0.7%) was the lone laggard in negative territory while the information technology (+4.4%), materials (+3.3%), and consumer discretionary (+3.2%) sectors saw the largest gains. 

The rally really picked up steam with the release of the May Consumer Price Index (CPI) on Tuesday followed by the May Producer Price Index (PPI), FOMC decision, and Fed Chair Powell's press conference on Wednesday. The CPI and PPI reports went the market's way in terms of feeling better about the inflation trend. 

In response to those reports, stock market action reflected a belief that the Fed may not over-tighten and precipitate a worse economic outcome than is necessary to get inflation back down to its 2.0% target. This was in spite of Fed Chair Powell's commentary that indicated more rate hikes may be needed.  

The FOMC voted unanimously to keep the target range for the fed funds rate unchanged at 5.00-5.25%. The latest dot-plot showed an upward thrust in the median projection for the fed funds rate in 2023 to 5.60% from 5.10%. In other words, the median view calls for at least two more rate hikes in 2023. Also, the median policy rate projection for 2024 was revised to 4.60% from 4.30% and the median projection for 2025 was revised to 3.40% from 3.10%, which supports a "higher for longer" policy rate outlook.

Fed Chair Powell said in his press conference that the July meeting is a "live" meeting (for looking at a possible policy change), but one that isn't being pre-determined.

Regardless, the price action still reflected a growing belief that the Fed may be done, or close to done, raising rates. The sizable gains logged on Thursday likely triggered a flat squeeze as investors employed cash from the sidelines due to a fear of missing out on further gains.

Following the FOMC decision, the ECB announced a 25 basis points increase in its three key policy rates, as expected, while the Bank of Japan left its interest on excess reserves (-0.10%) and yield curve control unchanged. Also, the People's Bank of China announced a 10 basis points cut in the one-year medium-term lending facility rate to 2.65%. This followed China's weaker than expected retail sales, industrial production, and fixed asset investment data for May.

• Nasdaq Composite: +3.3% for the week / +30.8% YTD

• S&P 500: +2.6% for the week / +14.9% YTD

• Russell 2000: +0.5% for the week / +6.5% YTD

• S&P Midcap 400: +1.5% for the week / +6.2% YTD

• Dow Jones Industrial Average: +1.3% for the week / +3.5% YTD

Market Recap - CONSTRUCTIVE WEEK FOR THE BULLS

It Was A Constructive Week For The Bulls.

The S&P 500 closed Thursday's session (4,293.93) more than 20% above its October closing low, which enables it to meet the technical definition of being in a new bull market. On Friday, the S&P 500 climbed past 4,300 for the first time since August, but it couldn't maintain that position on a closing basis, ultimately settling just a whisker shy of 4,300.

This was the fourth and seventh straight week of gains for the S&P 500 and Nasdaq, respectively. 

There was more broad based participation as money rotated out of mega caps and into other areas of the market. Some of the mega caps fell prone to profit taking after a big run and to some valuation angst.

A notable exception in that regard was Tesla, which jumped 14.2% this week and logged its eleventh straight gain on Friday. Some of that strength followed the announcement of a charging network deal with General Motors.

Apple, meanwhile, closed flat this week after introducing its Vision Pro mixed reality headset at its Worldwide Developers Conference on Monday.

The market behaved in a manor that suggest participants were hopeful the economy could avoid a hard landing. The Russell 2000, which is predominately comprised of domestically-oriented stocks, outperformed after lagging so far this year. It was the top performing major index with a 1.9% gain. 

That outperformance was helped out by strong regional bank shares. That move was partially fueled by Goldman Sachs lowering its probability of a recession in the next 12 months to 25% from 35%, citing receding banking risks.

The S&P 500 financials sector was among the top gainers, up 1.1%. Other top performers included the cyclically-oriented industrials (+1.4%) and energy (+1.7%) sectors. Unsurprisingly, the consumer discretionary sector (+2.4%) logged the biggest gain by a decent margin thanks to Tesla. 

On the flip side, the information technology (-0.7%) and consumer staples (-0.5%) sectors saw the biggest declines.

Market participants were also reacting to some softer labor data in the form of the weekly initial jobless claims report, which came in at the highest level (261,000) since November 2021. Other notable data this week included the May ISM Non-Manufacturing Index, which fell to 50.3% from 51.9% in April, skirting the dividing line between expansion and contraction (i.e. the 50% level).

Treasuries settled the week with losses. The 2-yr note yield rose 11 basis points to 4.62% and the 10-yr note yield rose six basis points to 3.75%. This comes ahead of the FOMC decision next Wednesday. Presently, the fed funds futures market is pricing in a 28.8% probability of a 25 basis points rate hike for June and a 69.4% probability of a 25 basis points rate hike for July.

In other central bank news, the Bank of Canada surprised market participants with a 25 basis points rate hike to 4.75%.

• Nasdaq Composite: +0.1% for the week / +26.7% YTD

• S&P 500: +0.4% for the week / +12.0% YTD

• Russell 2000: +1.9% for the week / +5.9% YTD

• S&P Midcap 400: +1.5% for the week / +4.6% YTD

• Dow Jones Industrial Average: +0.3% for the week / +2.2% YTD

Market Recap - Short week brings decent gains

The Stock Market Had A Strong Showing Overall On This Holiday-Shortened Week. The S&P 500, Which Flirted With 4,100 Last Week, Approached 4,300 During Friday's Trade, Reaching 4,290 At Its High Of The Day.

Uncertainty about the debt ceiling, which had loomed over the market for weeks, finally eased after a deal was passed by both chambers of Congress. The bill now heads to President Biden for signing.

This week brought some Fed commentary that had market participants rethinking Fed policy. Early Wednesday, the CME FedWatch Tool showed a 70% probability of another 25-basis points rate hike at the June meeting in response to Cleveland Fed President Mester (not an FOMC voter) telling FT that she sees no compelling reason to pause the rate hikes in June.

Later that day, Fed Governor Jefferson (FOMC voter), who is also the nominee for Vice Chair, said he thinks that "...skipping a rate hike at the coming meeting would allow the Committee to see more data before making decisions about the extent of additional policy firming" and Philadelphia Fed President Harker (2023 FOMC voter) said he thinks the Fed can "take a bit of a skip for a meeting." 

In response, the probability of a 25-basis points rate hike at the June meeting plunged to 25.6%, according to the CME FedWatch Tool. Still, Fed officials continue to signal that more rate hikes may be needed.

Market participants also received a slate of labor and inflation data that helped to keep recession and rate hikes concerns at bay for the time being. The May ISM Manufacturing Index featured a drop in new orders but also a pleasant-looking deceleration in the Prices Paid Index.

The May Employment Situation Report featured a 339,000 increase in nonfarm payrolls, a moderation in year-over-year average hourly earnings growth to 4.3% from 4.4%, and a bump in the unemployment rate to 3.7% from 3.4%.

Also, weekly initial jobless claims and the April JOLTS - Job Openings Report reflected continued strength in the labor market.

Mega cap stocks had been driving a lot of the action this year, but this week saw money rotate into areas of the market that had been trailing.

There was also some mixed earnings news this week from retailers. Most notably, lululemon, Advance Auto, Dollar General, and Macy's all made outsized moves after their earnings reports.

The S&P 500 consumer discretionary (+3.3%) and real estate (+3.1%) sectors saw the biggest gains this week. Meanwhile, the utilities (+0.8%) and consumer staples (+0.3%) sectors closed with the slimmest gains.

Treasuries ended the week with gains. The 2-yr note yield fell five basis points to 4.51% and the 10-yr note yield fell 11 basis points to 3.69%.

• Nasdaq Composite: +1.8% for the week / +26.5% YTD

• S&P 500: +2.0% for the week / +11.5% YTD

• Russell 2000: +3.3% for the week / +4.0% YTD

• Dow Jones Industrial Average: +2.0% for the week / +1.9% YTD

• S&P Midcap 400: +2.6% for the week / +3.1% YTD

Market Recap - Heavy week of news ends on upbeat note

The stock market finished out this week on an upbeat note ahead of the extended holiday weekend.

The major indices saw some turbulent action, though, as market participants dealt with a lot of crosscurrents. The S&P 500 traded in a wide band between 4,100 and its closing level on Friday, which was just above 4,200.

The latter is the highest level for the S&P 500 since last August. 

Uncertainty about the debt ceiling kept the market in check earlier in the week as contrasting reports emerged about how much progress was being made. Concerns reached a peak when Fitch Ratings put the nation's AAA rating on Credit Watch Negative. By Friday, though, some angst around the debt ceiling seemed to ease due to reports that negotiators were making progress and that a deal could be near. 

Lingering rate hike concerns were also in play as investors reacted to the following commentary from Fed officials:

·   Minneapolis Fed President Kashkari (FOMC voter) said in a CNBC interview that a decision to pause in June is a close call, adding that if the Fed pauses in June, it does not mean the tightening cycle is over.

·   St. Louis Fed President Bullard (not an FOMC voter) said he thinks two more rate hikes are needed this year, according to Bloomberg.

·   Fed Governor Waller (FOMC voter) said in a speech on policy rate hikes that "we need to maintain flexibility on the best decision to take in June... fighting inflation continues to be my priority." 

·   Cleveland Fed President Loretta Mester (not an FOMC voter) told CNBC in an interview that when she looks at the data, it does look like the Fed will have to tighten a bit more.

Some economic data this week corroborated the view that more rate hikes may be needed. Briefly, Q1 GDP was revised up to 1.3% from 1.1%, weekly initial jobless claims came in lower than expected, and the Personal Income and Spending Report on Friday reflected strong consumer spending and an uptick in the year-over-year PCE and core-PCE Price Indices.

Following the release of the Personal Income and Spending Report, market participants dialed up expectations of a 25 basis points rate hike at the June FOMC meeting. According to the CME FedWatch Tool, there is a 65.4% probability of a 25 basis points rate hike in June, up from 17.4% last Friday and 13.7% a month ago.

Market participants were also digesting some market-moving corporate news. NVIDIA logged a huge gain following its stellar quarterly results and guidance. Marvell Technology was also a big winner after its earnings report. Those names helped drive the outperformance of the PHLX Semiconductor Index this week, which jumped 10.7%. After this week's gain, the SOX is up 18.4% this month.

There was also a slate of earnings reports from retailers, which fueled some outsized moves to the upside and the downside.

In addition, mega caps continued their outperformance.

Treasury yields moved sharply higher this week. The 2-yr note yield rose 29 basis points as market participants recalibrated Fed policy outlook to 4.56%. The 10-yr note yield rose 11 basis points to 3.80%. The U.S. Dollar Index rose 1.0% to 104.23.

S&P 500 sector performance reflected leadership from mega cap stocks. The information technology (+5.1%), communication services (+1.2%), and consumer discretionary (+0.4%) sectors were the lone outperformers to close with a gain this week. Meanwhile, the consumer staples (-3.2%) and materials (-3.1%) sectors were the weakest performers. 

·   Nasdaq Composite: +2.5% for the week / +24.0% YTD

·   S&P 500: +0.3% for the week / +9.5% YTD

·   Russell 2000: UNCH for the week / +0.7% YTD

·   Dow Jones Industrial Average: -1.0% for the week / -0.2% YTD

·   S&P Midcap 400: -0.5% for the week / +0.5% YTD

Market Recap - S&P 500 BREAKS OUT OF SIX WEEK TRADING RANGE

The Major Indices All Logged Gains This Week, Which Ends A Six Week Stupor For The S&P 500 Where It Neither Gained Nor Declined More Than 1.0%.

The S&P 500 also hit a new closing high for the year on Thursday (4,199) and a new intraday high for the year on Friday (4,212). The index was unable, however, to maintain a posture above 4,200 on a closing basis, which has been an area of stern resistance since August 2022. 

The continued outperformance of the mega cap stocks helped to support index performance, yet more stocks under the surface participated in this week's gains compared to recent weeks.

Market participants were contending with mixed directions signals throughout the week. Optimism about a debt ceiling deal began to emerge after President Biden met with congressional leaders on Tuesday. Commentary from congressional leaders fueled hope that the parties were more aligned with debt ceiling negotiations. That optimism continued to build until Friday when Punchbowl News reporter Jake Sherman tweeted that "debt limit talks between the White House and House Republicans have been paused, per multiple sources involved in the talks."

Some hawkish sounding Fed commentary was also in play this week. Specifically, Dallas Fed President Logan (FOMC voter) said that current data doesn't yet support the Fed pausing in June. St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high. Although Mr. Bullard does not vote on the 2023 FOMC, his view nonetheless reinforces the notion that Fed officials are not talking rate cuts this year.

Treasuries saw some unwinding of the safety premium this week, especially at the short end of the curve, as participants contemplated the possibility of the Fed raising rates again at the June FOMC meeting. The 2-yr note yield rose 29 basis points this week to 4.27% and the 10-yr note yield rose 23 basis points to 3.69%. 

The bond market was also reacting to the optimism early in the week about debt ceiling talks along with some pleasing price action in regional bank stocks. The SPDR S&P Regional Banking ETF rose 7.8% after Western Alliance (WAL) said its deposits have increased by more than $2 billion since the end of the first quarter. WAL rose 24.9% this week on the news. 

Earnings season is winding down, but this week was punctuated by earnings reports from some key retailers. Dow components Home Depot (HD) and Walmart (WMT) received mixed reactions with HD losing some ground and WMT moving higher after they reported earnings. Target also moved higher on its earnings report while Foot Locker plunged 27% on Friday after reporting disappointing earnings results and issuing dismal guidance.

Most of the S&P 500 sectors logged gains this week led by information technology (+4.2%), consumer discretionary (+2.6%), communication services (+3.1%), and financials (+2.2%). Meanwhile, the utilities (-4.4%) sector saw the biggest decline by a decent margin followed by real estate (-2.4%). 

• Nasdaq Composite: +3.0% for the week / +20.9% YTD

• S&P 500: +1.7% for the week / +9.2% YTD

• Russell 2000: +1.9% for the week / +1.1% YTD

• Dow Jones Industrial Average: +0.4% for the week / +0.8% YTD

• S&P Midcap 400: +1.0% for the week / +0.7% YTD

Market Recap - Mega caps hold up broader market

Mega caps hold up broader market

Nasdaq Composite closed the week with a slim gain while the S&P 500 closed with a slim loss.

The 4,100 level was an important area of relative support for the S&P 500 this week. Index level price action was somewhat misleading, though, with more selling occurring under the surface. Mega cap stocks, benefitting from some flight to safety buying, held up the broader market.

The Invesco S&P 500 Equal Weight ETF fell 1.1% this week while the Vanguard Mega Cap Growth ETF rose 0.8%.  Alphabet offered a lot of support, rising 11.0% this week following its Developers Conference on Wednesday. 

Market participants were digesting the April Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) on Monday. In brief, the SLOOS confirmed what the market had already been expecting following the regional banking crisis that began in mid-March. Lending standards have tightened and banks expect to tighten standards across all loan categories over the remainder of 2023. There was knee-jerk volatility in the immediate aftermath, yet the major indices closed little changed from levels seen before the release of the SLOOS. 

PacWest (PACW) was a losing standout from the bank stocks, falling another 21.0% this week after announcing that its deposits declined approximately 9.5% for the week ending May 5. PACW also cut its dividend to $0.01 per share from $0.25.

Angst about the debt ceiling weighed over the broader market after Treasury Secretary Yellen warned last weekend of "economic chaos" if the debt ceiling is not raised. President Biden met with congressional leaders on Tuesday to discuss the debt ceiling, yet that did not quell the market's worries. Reports suggested that the meeting showed no signs that they had moved closer to a deal. President Biden was supposed to meet with congressional leaders again on Friday, but that meeting was postponed until early next week as staff members continue to negotiate.  

Meanwhile, market participants were reacting to the latest inflation readings in the form of the April Consumer and Producer Price Indices. Those reports largely went the market's way, which is to say that the continued month-over-month moderation in inflation should at least spur the Fed to entertain keeping its policy rate on hold when it meets again in June.

Economic releases culminated Friday with the release of the preliminary University of Michigan Consumer Sentiment Survey for May, which featured a drop in sentiment and an increase in five-year ahead inflation expectations to 3.2% from 3.0%. That is the highest reading since 2011. Notably, the NY Fed's Survey of Consumer Expectations for April also reflected a slight increase in three-year and five-year ahead inflation expectations. 

Separately, Disney was a drag on sentiment on Thursday after reporting fiscal Q2 results that featured a 2% year-over-year decline in Disney+ paid subscribers.

Growth concerns manifested themselves in S&P 500 sector performance. Energy (-2.2%), materials (-2.0%), and industrials (-1.2%) showing some of the steepest declines. Unsurprisingly, the financials sector was another top laggard, down 1.4%.

The communication services (+4.3%) and consumer discretionary (+0.6%) sectors were the lone outperformers to log a gain, boosted by their respective mega cap components. 

The 2-yr Treasury note yield rose seven basis points to 3.98% this week and the 10-yr note yield rose one basis point to 3.46%. The U.S. Dollar Index rose 1.4% to 102.71.

• Nasdaq Composite: +0.4% for the week / +17.4% YTD

• S&P 500: -0.3% for the week / +7.4% YTD

• Dow Jones Industrial Average: -1.1% for the week / +0.5% YTD

• S&P Midcap 400: -1.2% for the week / +0.1% YTD

• Russell 2000: -1.1% for the week / -1.2% YTD

Market Recap - Rate hikes and regional banks take center stage

The stock market closed out the first week of May on an upbeat note, but Friday's positive price action was not enough to recoup this week's losses for most of the major indices.

The S&P 500 breached its February high closing level (4,179) this week, hitting 4,186 at its high on Monday, before slipping below the 4,050 level on Thursday.  

There was no shortage of market-moving events this week that included a barrage of earnings reports, the FOMC rate hike on Wednesday, the ECB rate hike and Apple's earnings report on Thursday, and the April Employment Report on Friday. In addition, there was a surprise announcement on Tuesday from Treasury Secretary Yellen that extraordinary measures to pay the nation's bills could be exhausted as early as June 1. Following that disclosure, it was announced that President Biden will meet with House Speaker McCarthy and other Congressional leaders on May 9 to discuss the debt ceiling.

Overarching themes that drove the price action were growth concerns, ongoing fallout in regional bank stocks, debt ceiling worries, and uncertainty about central banks overtightening and forcing a sharper economic slowdown; however, Friday's trade was dictated by the upbeat response to Apple's earnings report, the April Employment Report, and a needed rebound in the regional bank stocks.

Market participants learned last weekend that First Republic Bank (FRC) was seized by regulators. Subsequently, the FDIC facilitated a deal whereby JPMorgan Chase acquired a substantial majority of assets and assumed the deposits and certain liabilities of FRC. Then on Thursday, PacWest confirmed it's considering strategic options. Concerns continued to mount after the FT reported that Western Alliance is also considering strategic alternatives, including a possible sale, yet Western Alliance disputed the report, calling it "categorically false in all respects."

PacWest and Western Alliance fell sharply this week, registering losses of 43.3% and 26.8%, respectively, despite outsized gains on Friday due to short-covering activity.

Worries about central banks overtightening and forcing a sharper economic slowdown came into focus on Wednesday after the FOMC voted unanimously to raise the target range for the fed funds rate by 25 basis points to 5.00-5.25%, which was largely expected. The main indices declined that day, however, on the nagging view that the Fed is not inclined to cut interest rates soon despite a contrary view that has been priced into the fed funds futures market.

Some of Fed Chair Powell's remarks in his press conference that participants were presumably reacting to included his acknowledgement that the process of getting inflation back down to 2.0% has a long way to go. He added that if the Fed's inflation forecast is broadly right, it would not be appropriate to cut rates.

The Hong Kong Monetary Authority, the Norges Bank, and the ECB all followed the FOMC rate hike by raising their key lending rates by 25 basis points.

By Friday, though, some concerns about overtightening and central banks forcing a hard landing for the economy started to dissipate. The shift in sentiment was in response to the April Employment Report, which was good enough to engender some thoughts that a soft landing for the economy may still be possible despite the Fed's aggressive rate hikes.

Apple drove a lot of the index level gains on Friday following its pleasing earnings report and capital return plan.

Only three of the 11 S&P 500 sectors closed with gains this week unsurprisingly led by the information technology sector (+0.6%), benefitting from the move in Apple. The defensive-oriented health care (+0.1%) and utilities (+0.1%) sectors also outperformed. The energy sector (-5.8%) saw the biggest decline by a wide margin followed by financials (-2.7%) and communication services (-2.3%). 

In other stock specific news, there was a successful IPO on Thursday with Johnson & Johnson's consumer health spinoff Kenvue going public.

Treasuries settled the week with gains in most tenors. The 2-yr note yield fell 15 basis points to 3.91% while the 10-yr note yield was unchanged at 3.45%. The U.S. Dollar Index fell 0.4% to 101.24.

• Nasdaq Composite: +0.7% for the week / +16.9% YTD

• S&P 500: -0.8% for the week / +7.7% YTD

• Dow Jones Industrial Average: -1.2% for the week / +1.6% YTD

• S&P Midcap 400: -1.2% for the week / +1.3% YTD

• Russell 2000: -0.5% for the week / -0.1% YTD

Market Recap - Huge batch of earnings brings mixed price action

The S&P 500, Dow Jones Industrial Average, and Nasdaq all closed the last week of April with gains while the Russell 2000 logged a sizable decline.

Investors received a huge slate of earnings news and economic data this week, which all reflected mixed activity. Those mixed results fueled a midweek sell-off before a strong rally effort during the last two sessions saw the market pick itself back up. 

Earnings results from many mega cap stocks pulled a lot of focus this week. Namely, Alphabet, Microsoft, Meta Platforms, and Amazon.com all reported quarterly results. Unsurprisingly, their reports received mixed reactions from investors.

Alphabet and Amazon declined on their earnings reports, with the latter warning about slowing cloud services growth, while Microsoft and Meta Platforms rose sharply. Nonetheless, mega cap stocks a class made an outsized contribution to index level gains. The US Mega Cap Growth Index rose 1.9% on the week. 

The continued outperformance of the mega caps helped foster a sense of relief that those names are still performing relatively well from an operational standpoint and maintaining their position as market leaders.

On the flip side, some earnings reports piled onto investors' lingering growth concerns. Most notably, UPS, Dow component Dow Inc., Texas Instruments, and Norfolk Southern all disappointed with their earnings and/or guidance. 

Ongoing fallout at First Republic Bank following its disappointing earnings report, which featured a 40% decline in deposits, renewed lingering worries about banks facing higher deposit costs and tighter lending standards, potentially impeding on economic growth prospects. Notably, the market bounced back quickly from a sharp decline after CNBC reported that FRC is likely headed to receivership, indicating that issues at FRC are not viewed as systemic.

Economic data this week showed signs of weakness, yet there was no clear signal that the economy is deteriorating rapidly. The advance Q1 GDP report didn't look great on the surface with real GDP increasing at an annualized rate of 1.1% (Briefing.com consensus 2.0%) after increasing 2.6% in the fourth quarter. However, personal consumption expenditure growth accelerated in the first quarter to 3.7% from 1.0% in the fourth quarter. 

The March Durable Orders report contributed to slowdown concerns due to a 0.4% decline in nondefense capital goods orders in March -- a proxy for business spending. Separately, the labor market remains strong as evidenced by the initial jobless claims remaining a long way from the levels that have been seen in past recessions since 1980.

The S&P 500 communication services sector (+3.8%) was the top gainer this week by a big margin, followed by information technology (+2.4%) and real estate (+1.5%). The utilities (-1.0%) and industrials (-0.6%) sectors logged the biggest declines. 

Treasuries logged gains across the curve this week. The 2-yr note yield fell 10 basis points to 4.06% and the 10-yr note yield fell 12 basis points to 3.45%. The U.S. Dollar Index closed the week flattish at 101.68. 

·   Nasdaq Composite: +1.3% for the week / +16.8% YTD

·   S&P 500: +0.9% for the week / +8.6% YTD

·   Dow Jones Industrial Average: +0.9% for the week / +2.9% YTD

·   S&P Midcap 400: -0.3% for the week / +2.5% YTD

·   Russell 2000: -1.3% for the week / +0.4% YTD

Market Recap - Lackluster Action in Front of Big Week of Earning

The Stock Market Didn't Experience Much Up Or Down Price Action This Week. The S&P 500 Closed At 4,137 Last Friday, Then Closed At 4,133 This Friday.

There was not much volatility in daily price action as well with the major indices languishing along, moving mostly sideways.

Investors were playing a waiting game ahead of a big batch of earnings results next week that will feature reports from some mega cap stocks, including Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), and Meta Platforms (META). These reports will follow disappointing Q1 results from Tesla (TSLA), which plunged nearly 10.0% on Thursday.

Meanwhile, Dow component Procter & Gamble (PG) rose 3.5% on Friday as investors digested its pleasing fiscal Q3 results and affirmation of its FY23 EPS outlook.

Bank stocks were a pocket of weakness this week following earnings reports from some regional banks, including Zions Bancorporation (ZION), Truist Financial (TFC), and Western Alliance Bancorp (WAL). Despite regional bank weakness, the S&P 500 financial sector was among the top performers with a 1.0% gain.

Other top performing sectors include real estate (+1.6%), consumer staples (+1.7%), and utilities (+1.1%). The communication services (‐3.1%) and energy (‐2.5%) sectors were the worst performers by a wide margin.

Market participants were also reacting to a slate of weak economic data, which contributed to the hesitant mindset due to a sense that slower growth will put pressure on future earnings. Data releases this week featured the highest continuing jobless claims level since November 27, 2021, the weakest reading for the Philadelphia Fed Index (‐31.3) since May 2020, the weakest level for the U.S. Leading Economic Index since November 2020, and a 22% year‐over‐year decline in existing home sales in March.

The market continues to contend with the notion that the Fed will keep rates higher for longer. Philadelphia Fed President Harker (FOMC voter) said the Fed is going to need to do more to get inflation back down to target, according to Reuters. This followed New York Fed President Williams (FOMC voter) signaling support for another rate hike at the May FOMC meeting and Cleveland Fed President Mester's remarks, according to CNBC, that policy needs to move somewhat further into tightening territory with the fed funds rate above 5.00%.

Earlier in the week, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there "for quite some time."

This commentary from Fed officials contrasts the fed funds futures market, which is pricing in two rate cuts before the end of the year, according to the CME FedWatch Tool.

Oil prices declined this week, reflecting slowdown concerns. WTI crude oil futures fell 5.5% to $77.86/bbl. Natural gas futures rose 5.0% to $2.22/mmbtu.

The 2‐yr Treasury note yield rose six basis points this week to 4.16% and the 10‐yr note yield rose five basis points to 3.57%.

• Nasdaq Composite: ‐0.4% for the week / +15.3% YTD

• S&P 500: ‐0.1% for the week / +7.7% YTD

• S&P Midcap 400: +0.4% for the week / +2.8% YTD

• Dow Jones Industrial Average: +1.2% for the week / +2.3% YTD

• Russell 2000: +0.6% for the week / +1.7% YTD