Market Recap - ONGOING SELLING BRINGS S&P 500 BELOW KEY TECHNICAL SUPPORT

The Major Indices All Closed With Losses This Week, Driven By Rising Market Rates And Carryover Downside Momentum After The Persistent Selling In August.

Some of the sessions this week featured below average volume, which is consistent with late-summer activity. 

This week's selling led the S&P 500 to breach support at its 50-day moving average for the first time since March and take out support at the 4,400 level. Still, the price action this week seemed consistent with the consolidation mindset that has driven stock performance so far this month.

The price action in Treasuries was one of the biggest catalysts for selling interest in the stock market. The 10-yr note yield, which settled at its highest level since November 2007 on Thursday (4.31%), rose eight basis points this week to 4.25%.

The 10-yr note yield is now up 29 basis points for the month with participants keying on supply matters and incoming data that continue to validate the soft landing/no landing scenario that presumably will keep inflation above the Fed's 2.0% goal and the Fed itself in a higher-for-longer mindset that includes a consideration of raising rates yet again.

Participants received the FOMC Minutes from the July 25-26 meeting this week, which induced some volatility in the immediate aftermath of the release. The knee-jerk selling was in response to some hawkish sounding headlines from the minutes. For example, "most participants continued to see significant upside risks to inflation, which could require further tightening of monetary policy." That view wasn't exactly surprising, however, considering remarks made by Fed Chair Powell after the meeting. 

Global growth worries, especially related to China, also kept stocks under pressure this week. China reported a batch of weaker than expected retail sales, industrial production, and fixed asset investment data for July, along with another decline in home prices. In addition, property developer Evergrande filed for Chapter 15 bankruptcy protection in the U.S.

The People's Bank of China, in response to weakening economic activity, lowered its one-year medium-term lending facility rate to 2.50% from 2.65% and lowered the seven-day reverse repurchase rate by ten basis points to 1.80%. The PBOC also reportedly instructed state banks to intensify their interventions in the foreign exchange market to support the yuan.

Bank stocks were a weak pocket in the market after a warning from Fitch Ratings that it might be forced to downgrade the ratings of dozens of additional banks. The warning came just a week after Moody's cut the ratings of ten small to mid-sized U.S. banks.

On the earnings front, Dow components Home Depot and Cisco were met with positive reactions to their reports while fellow Dow component Walmart logged a decline after its earnings report. 

Target and TJX Cos. were also among the standout winners, along with Applied Materials.

• Nasdaq Composite: -2.6% for the week / +27.0% YTD

• S&P 500: -2.1% for the week / +13.8% YTD

• Russell 2000: -3.4% for the week / +5.6% YTD

• S&P Midcap 400: -3.1% for the week / +6.1% YTD

• Dow Jones Industrial Average: -2.2% for the week / -4.1% YTD

Market Recap - CONSOLIDATION TRADE CONTINUES

The Dow Jones Industrial Average Eked Out A Slim Gain While The S&P 500, Nasdaq, And Russell 2000 All Registered Losses.

Trading this week reflected a consolidation mindset that has taken root in August after a huge, and nearly unabated, run for the stock market since late March. The S&P 500 for its part closed below the 4,500 level on Friday.

This week also featured some sessions with below-average volume at the NYSE, reflecting a lack of participation on this first week full week of August. 

There were a number of news catalysts that gave market participants an excuse to take money off the table this week. Global growth concerns were piqued  by weaker-than-expected trade data for July and much weaker than expected new yuan loan growth for July out of China, along with a warning from Chinese property developer Country Garden Holdings that it anticipates losing nearly $8 billion in the first half of 2023.

Also, a slate of U.S. economic data was mixed in aggregate. Total CPI and core-CPI were both spot-on with consensus estimates while the Producer Price Index for July was hotter than expected at the headline level, but not really too hot after accounting for downward revisions for June. Initial jobless claims, meanwhile, continue to run well below recession levels. 

Earlier in the week, Moody's downgraded the credit ratings for 10 smaller U.S. banks and put some bigger banks on watch for downgrade, which also contributed to the consolidation mindset. 

On the earnings front, Dow component Walt Disney was a winning standout, jumping 3.2% on the week after reporting results, while UPS sank after it issuing disappointing FY23 revenue outlook, citing weakening e-commerce demand and an expectation for lower volumes following the improved labor contract for the lowered guidance.

The S&P 500 energy (+3.5%) and health care (+2.5%) sectors led the outperformers while the information technology sector (-2.9%) saw the largest decline.

Treasury yields continued to climb this week, acting as another limiting factor for equities. The 2-yr note yield rose 11 basis points to 4.89% and the 10-yr note yield rose nine basis points to 4.17%.

• Nasdaq Composite: -1.9% for the week / +30.4% YTD

• S&P 500: -0.3% for the week / +16.3% YTD

• Russell 2000: -1.7% for the week / +9.3% YTD

• S&P Midcap 400: -0.8% for the week / +9.5% YTD

• Dow Jones Industrial Average: +0.6% for the week / +6.4% YTD

Market Recap - Rising Long Term Rates Pressure Stocks

It Was A Huge Week Of Earnings That Resulted In Stock Market Losses. Apple (AAPL) And Amazon (AMZN) Were The Earnings Reports That Carried The Most Market‐Moving Weight.

Those reports garnered mixed reactions from investors, propelling shares of Amazon 8.3% higher on Friday while Apple fell 4.8%.

Overall, the price action this week was driven by a big jump in long‐term rates that provided an excuse for participants to take some money off the table in a short‐term overbought market.

The factors that drove the move in rates included supply concerns and the continuation of relatively strong data that support the view that the Fed is apt to keep rates higher for longer and may yet find reason to raise the policy rate again.

Still, the Fitch Ratings downgrade of U.S. credit to AA+ from AAA stole the show as a talking point when it comes to discussing the move in rates. The downgrade reflected the expected fiscal deterioration over the next three years, growing government debt, and erosion of governance related to peers.

Market rates actually declined following the downgrade, but shot higher immediately following the much larger‐than‐expected increase in ADP private‐sector payrolls.

Treasuries started to widened their losses after the release of a better than expected report on productivity and unit labor costs on Thursday. Weekly initial jobless claims increased slightly, but still reflect a strong labor market. Meanwhile, the ISM Non‐Manufacturing Index showed that services sector growth decelerated in July.

On Thursday, the 10‐yr note yield settled just 14 basis points shy of its high from October while the 30‐yr yield was just 12 basis points below last year's high.

Yields ultimately backpedaled from their highs in response to the July Employment Situation Report, which showed a slowdown in nonfarm payroll growth hat had the market considering the idea that it may be enough to keep the Fed on hold. The 10‐yr yield closed nine basis points higher on the week to 4.06%. The 30‐yr yield jumped 18 basis points to 4.21%.

The highest probability that the market is assigning for another Fed rate hike at any of the remaining meetings this year is just 27.7% for the November FOMC meeting, according to the CME FedWatch Tool.

On a central bank related note, the Bank of England announced a 25 basis points rate hike to 5.25%.

Only one of the S&P 500 sectors logged a gain ‐‐ energy (+1.2%) ‐‐ while the utilities (‐4.7%), information technology (‐4.1%), and communication services (‐2.9%) sectors saw the largest declines.

• Nasdaq Composite: ‐2.9% for the week / +32.9% YTD

• S&P 500: ‐2.3% for the week / +16.6% YTD

• Russell 2000: ‐1.2% for the week / +11.1% YTD

• S&P Midcap 400: ‐1.3% for the week / +10.3% YTD

• Dow Jones Industrial Average: ‐1.1% for the week / +5.8% YTD

Market Recap - Rally continues on heavy week of news

The Stock Market Registered Gains On This Busy Week Of Earnings, Economic, And Central Bank News. In Aggregate, None Of The Events This Week Changed The Market's View That Has Been Driving Recent Gains.

Participants continue to marvel at the resiliency of the US economy, expect that the Fed is close to being done raising rates, and hope that earnings growth will accelerate in the second half of the year. 

The FOMC voted unanimously on Wednesday to raise the target range for the fed funds rate by 25 basis points to 5.25-5.50%, as expected. The policy directive also upgraded the description of economic activity to expanding at a moderate pace from continuing to expand at a modest pace in the June directive.

Expectations for a second rate hike at any of the meetings before the end of the year were largely unchanged. According to the CME FedWatch Tool, probability of a second rate hike at any of the remaining FOMC meetings this year remains under 30%. 

The ECB followed suit the FOMC rate hike with a 25 basis points increase in its three key lending rates, although there is some speculation, driven by the language in its directive, that the ECB could also be close to being done raising rates. 

Elsewhere, the Bank of Japan made no changes to its interest rates, but surprised market participants when it voted to conduct its yield curve control policy with greater flexibility, saying it will maintain the target rate at 0.5%, but will offer to purchase 10-yr JGBs at 1.0% every business day through fixed-rate purchase operations. 

On the earnings front, Microsoft, Alphabet, and Meta Platforms were the most influential movers. Microsoft's results were deemed a little disappointing when its revenue guidance didn't live up to bullish expectations, but it was a good report overall. Alphabet and Meta Platforms both delivered results and/or guidance that triggered some distinctly positive action in their prices. 

Those gains, along with earnings-related gains in some blue chip names like Boeing, McDonald's, and Dow Inc., underpinned index performance.

The market continues to see a broadening out of the buying interest, although this week's gains were spear headed by the mega cap space.

The S&P 500 communication services sector was the best performer by a wide margin, rising 6.9%, reflecting the strong showing from Meta Platforms and Alphabet. Other top performers included the materials (+1.8%) and energy (+1.7%) sectors. Meanwhile, the utilities (-2.1%) and real estate (-1.8%) sectors saw the biggest declines. 

This week also featured a series of economic reports that continue to validate the soft landing/no landing view. There was an uptick in consumer confidence, which was driven both by a pickup in views about current conditions and the outlook, another low level of weekly initially jobless claims, and a strong than expected 2.4% increase in Q2 GDP, which was up from 2.0% in Q1.

Rounding out the econ calendar was the June Personal Income and Spending Report, which showed solid spending and ongoing disinflation. 

Next week will be even busier in term of earnings news. There's also some market-moving economic data in the form of the ISM Manufacturing and Services Indexes and the July Employment Report.

• Nasdaq Composite: +2.0% for the week / +36.8% YTD

• S&P 500: +1.0% for the week / +19.3% YTD

• Russell 2000: +1.1% for the week / +12.5% YTD

• S&P Midcap 400: +0.4% for the week / +11.8% YTD

• Dow Jones Industrial Average: +0.7% for the week / +7.0% YTD

Market Recap - GAINS BROADEN OUT AMID EARNINGS REPORTING

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

Market Recap - BROAD MARKET HAS A VERY GOOD WEEK IN MIDST OF FRIENDLY INFLATION DATA

The Stock Market Had A Very Good Week, Although Trading Volume At The NYSE Was On The Light Side All Week.

Not so for the Nasdaq, which saw heavier-than-average volume most days. Regardless of the volume totals, the bias was unmistakable. The stock market traded with a bullish bias.

Market participants continued to key on the notion that the economy will avoid a hard landing and that the Fed is close to being done raising interest rates. That thinking was corroborated by some key economic data this week that included the June CPI, PPI, and Import-Export Price Index, all of which showed inflation trending in a market-friendly direction, and another weekly initial claims report that was well below recession-like levels.

The CPI report was the headliner of the week. It was released before Wednesday's open and it showed a smaller-than-expected 0.2% increase in total CPI and a 0.2% increase in core CPI, which excludes food and energy. On a year-over-year basis, total CPI was up just 3.0%, versus 4.0% in May, which was the smallest increase since March 2021, and core CPI was up 4.8% versus 5.3% in May.

Treasury yields raced lower after the report and stock prices shot higher, following the trajectory Fundstrat's Tom Lee said before Monday's open that they would likely take if core CPI came in at 0.2% or less. Specifically, Mr. Lee said the S&P 500 could add as many as 100 points if the CPI report lived up to his expectations. When he made that call, the S&P 500 stood at 4,398.95. At its high on Friday, the S&P 500 hit 4,527.76.

The move from last Friday's closing level to this Friday's high was fueled by broad-based buying interest and a sizable drop in market rates. The 2-yr note yield declined 21 basis points this week to 4.73% while the 10-yr note yield dropped 23 basis points to 3.82%.

The Russell 2000 was up 4.6% for the week entering Friday's trade and settled the week up 3.6%.

The broader market overcame a weak start for the mega cap stocks on Monday, which coincided with the Nasdaq's announcement after last Friday's close that there will be a special rebalancing of the Nasdaq 100 on July 24 to address the overconcentration in the index that has resulted from gains in the "Magnificent Seven." It will be the first special rebalancing of the Nasdaq 100 since May 2011.

The mega-cap stocks, however, overcame their slow start to the week and finished with a flourish, ultimately outperforming the S&P 500 as a group.

All 11 S&P 500 sectors recorded gains this week that ranged from 0.6% (energy) to 3.4% (communication services). Those gains were logged as the Q2 earnings reporting period got underway, featuring reports from Delta Air Lines, PepsiCo, JPMorgan Chase, Wells Fargo, Citigroup, and UnitedHealth, all of which exceeded consensus earnings expectations.

Speaking of expectations, the fed funds futures market was emboldened by the friendly CPI report on Wednesday and effectively put a lid on the prospect of any additional rate hikes after the July meeting. The fed funds futures market has priced in a 96.1% probability of a 25-basis points rate hike at the July meeting, yet the probability of a second rate hike at the September, November, or December meetings sits at just 15.4%, 29.0%, and 25.2%, respectively, according to the CME FedWatch Tool.

Several Fed officials, however, don't seem ready to close the door on a second rate hike, preferring to wait for more data to draw their conclusions. Be that as it may, the fed funds futures market and the stock market are  embracing the one-and-done view.

That perspective placed some added pressure on the dollar this week, as other central banks, namely the ECB and Bank of England, are seen as having further to go with their rate-hike campaigns. The U.S. Dollar Index dropped a hefty 2.4% this week to 99.96.

That move, and the soft-landing view, led to a pickup in many commodity prices this week, including oil (+1.9%) and copper (+3.8%), which rose despite some weak data out of China that, naturally, sparked calls for more policy stimulus.

• Nasdaq Composite: +3.3% for the week / +34.8% YTD

• S&P 500: +2.4% for the week / +17.3% YTD

• S&P Midcap 400: +2.7% for the week / +10.0% YTD

• Russell 2000: +3.6% for the week / +9.6% YTD

• Dow Jones Industrial Average: +2.3% for the week / +4.1% YTD

Market Recap - A winning week all around

It Was A Winning Week All Around -- Literally. All 11 S&P 500 Sectors Finished Higher; The Major Indices All Finished Higher; And The Value Stocks As A Class Finished Higher As Did The Growth Stocks.

At this juncture, it will surprise no one to hear that the mega-cap stocks as a class also finished higher.

It was a fitting end to a month that saw the market-cap weighted S&P 500 break out above 4,200... then 4,300... and then 4,400 before settling the quarter at 4,450. The Nasdaq Composite for its part recorded its best first half (+31.7%) since 1983!

This week had it all going on.

• There was a reported coup attempt in Russia (which ended almost as quickly as it began).

• There was a batch of encouraging economic data (May Durable Goods Orders, June Consumer Confidence, May New Home Sales, Weekly Initial Jobless Claims, the upward revision to Q1 GDP, and the May Personal Income and Spending).

• There were reminders from Fed Chair Powell, ECB President Lagarde, and BoE Governor Bailey that more tightening will likely be needed to bring down inflation.

• There was a batch of IPOs (yes, you heard that right). 

• There was the release of the Federal Reserve's annual bank stress test results, which all 23 banks taking the test passed.

• There were earnings results -- some good and some bad -- from the likes of Carnival Corp., Walgreens Boots Alliance, General Mills, Micron, and Nike.

The constant through it all was an unshaken belief that the U.S. economy can avoid a recession and that the Federal Reserve is close to being done raising rates. That perspective underpinned the broad-based buying interest.

Notably, the sectors that were relative laggards this week were the countercyclical consumer staples (+0.6%), health care (+0.6%), and utilities (+0.7%) sectors. To be fair, communication services (+0.4%) was the least strong of all, having been pressured by a 1.7% decline in Alphabet, which was downgraded at UBS on Monday and at Bernstein on Tuesday.

Real estate (+5.0%) and energy (+4.8%) were the best-performing sectors this week followed by materials (+4.0%), industrials (+3.9%), financials (+2.9%), information technology (+2.9%), and consumer discretionary (+2.5%).

The Treasury market had a different experience, digesting another round of new supply and the bullish behavior of the stock market that might have spurred some asset reallocation trades. The 2-yr note yield increased 13 basis points this week to 4.88% while the 10-yr note yield rose eight basis points to 3.82%.

As a reminder, the stock market will be closing early at 1:00 p.m. ET on July 3 in observance of Independence Day. Markets will be closed on Tuesday, July 4.

• Nasdaq Composite: +2.2% for the week / +31.7% YTD

• S&P 500: +2.3% for the week / +15.9% YTD

• S&P Midcap 400: +4.3% for the week / +7.9% YTD

• Russell 2000: +3.7% for the week / +7.2% YTD

• Dow Jones Industrial Average: +2.0% for the week / +3.8% YTD

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