Market Recap - MEGA CAPS LEAD S&P 500, NASDAQ TO FRESH ALL-TIME HIGHS

The Major Indices Logged Gains This Week Largely Thanks To Mega Cap Stocks Outperforming Their Smaller Peers.

Still, the broader market showed nice resilience to selling efforts. The equal-weighted S&P 500 declined 0.7%  versus a 1.3% gain in the market-cap weighted index. The S&P 500 and Nasdaq Composite each logged a fresh all-time high this week.

NVIDIA was a standout from the spaces, topping a $3 trillion market value on a closing basis for the first time ever this week.

The strength in semiconductor stocks and mega caps boosted the S&P 500 information technology (+3.8%), consumer discretionary (+1.5%), and communication services (+1.7%) sectors to solid gains this week. Meanwhile, the utilities (-3.9%) and energy (-3.5%) sectors logged the largest declines.

Concerns about economic growth kept the broader market in check in response to this week's economic data. The ISM Manufacturing Index for May reflected a faster pace of contraction than the market expected, job openings decreased in April compared to March, and the May Employment Situation Report showed higher than expected earnings growth.

Treasury yields settled lower in response to the data and in response to the first rate cut by the ECB since September 2019. The 10-yr note yield settled eight basis points lower this week to 4.43% and the 2-yr note yield declined two basis points to 4.87%.

• S&P 500: +1.3% for the week /+12.1% YTD

• Nasdaq Composite: +2.4% for the week /+14.1% YTD

• S&P Midcap 400: -2.1% for the week /+5.0% YTD

• Dow Jones Industrial Average: +0.3% for the week / +2.9% YTD

• Russell 2000: -2.1% for the week / UNCH YTD

Market Recap - WINNING MONTH ENDS WITH DOWNBEAT WEEK

The Stock Market Closed This Holiday-Shortened Week With Losses, But Closed This Month With Solid Gains.

Mega cap stocks had an outsized impact on index performance through the month, especially NVIDIA, which jumped 26.9% in May. 

The equal-weighted S&P 500 gained 2.8% this month, versus a 4.8% gain in the market-cap weighted S&P 500. This week, however, the index logged a 0.5% decline. 

The downside bias this week was driven by some normal consolidation activity after the big run this month. 

Market participants had a slate of earnings news to get through this week, including from retailers like Best Buy, Foot Locker, Kohl's, and Dollar General. Dow component Salesforce was a losing standout following disappointing quarterly results, leading CRM to close 13.9% lower than last Friday. 

In other corporate news, ConocoPhillips will acquire Marathon Oil in an all-stock transaction.

The market also received a mixed batch of economic reports, highlighted by Friday's release of the April Personal Income and Spending report. The key takeaway from the report is that the year-over-year PCE inflation rates did not worsen; however, they did not improve either, so it seems unlikely that the Fed would find any new confidence in this report that inflation is moving sustainably toward its 2% target.

Treasuries settled mixed this week in response to the data and in response to some poorly received Treasury sales. This week's $69 billion 2-yr note, $70 billion 5-yr note, and $44 billion 7-yr note sales met weak demand. 

The 10-yr note yield rose five basis points this week to 4.51% and the 2-yr note yield declined six basis points to 4.89%. 

• S&P 500: -0.5% for the week / +4.8% for the month /+10.6% YTD

• Nasdaq Composite: -1.1% for the week / +6.9% for the month /+11.5% YTD

• S&P Midcap 400: +0.2% for the week / +4.3% for the month /+7.2% YTD

• Dow Jones Industrial Average: -2.3% for the week / +2.3% for the month /+2.6% YTD

• Russell 2000: UNCH for the week / +4.9% for the month / +2.1% YTD

Market Recap - Mixed Market After NVDA Earnings, Retailer Earnings, and Econ Data

The Market Settled This Week In Mixed Fashion.

The S&P 500 and Nasdaq Composite, which reached a fresh all‐time high, closed with gains while the Russell 2000 and Dow Jones Industrial Average logged solid losses this week.

The first half of the week featured muted price action due to a wait‐and‐see mindset in front of NVIDIA's (NVDA) earnings after Wednesday's close. NVIDIA (NVDA) shares surged in response to impressive earnings and outlook, which also bolstered semiconductor stocks and AI‐related names. This did not translate into support for the broader market due to a sense that stocks are due for some consolidation.

The PHLX Semiconductor Index (SOX) jumped 4.8% this week, the Vanguard Mega Cap Growth ETF (MGK) logged a 1.6% gain, and the Russell 3000 Growth Index climbed 0.9%.

This price action benefitted the S&P 500 information technology sector, which logged a 3.4% gain on the week. The only other sector that closed higher was communication services (+0.3%). Meanwhile, the energy (‐3.8%) and real estate (‐3.7%) sectors logged the biggest declines.

Market participants were reacting to mixed earnings news from a slate of retailers. Target (TGT), Lowe's (LOW), TJX (TJX), AutoZone (AZO), Macy's (M), and others reported quarterly results this week.

There was also a batch of economic data, which also garnered mixed responses. The S&P Global U.S. Manufacturing PMI increased to 50.9 from 50.0 while the S&P Global U.S. Services PMI jumped to 54.8 from 51.3, the New Home Sales Report for April was weaker than expected, April Durable Orders were stronger than expected, and the final reading of the University of Michigan's Consumer Sentiment survey, which showed that year‐ahead inflation expectations slowed to 3.3% from 3.5% in the preliminary reading.

The 10‐yr note yield settled four basis points higher this week and the 2‐yr note yield settled 13 basis points higher at 4.95%.

As a reminder, markets were closed on Monday for Memorial Day.

• S&P 500: +0.03% for the week / +11.2% YTD

• Nasdaq Composite: +1.4% for the week / +12.7% YTD

• S&P Midcap 400: ‐1.3% for the week / +7.0% YTD

• Dow Jones Industrial Average: ‐2.3% for the week / +3.7% YTD

• Russell 2000: ‐1.2% for the week / +2.1% YTD

Market Recap - STOCKS REACH FRESH RECORDS AS YIELDS DECLINE

Stocks Rallied This Week And Rates Declined In Response To This Week's Economic Releases, Which Went The Market's Way In Terms Of Implications For Fed Policy.

The major indices all logged fresh record highs on an intraday and on a closing basis. This price action had the Dow Jones Industrial Average trading above 40,000 for the first time. 

Specific economic reports this week included the April Consumer Price Index (CPI), showing disinflation on a year-over-year basis in total CPI (to 3.4% from 3.5%) and core CPI (to 3.6% from 3.8%). This followed three consecutive hotter-than-expected CPI readings, along with some other recent reports that indicated sticky prices, which contributed to growing worries about the Fed staying restrictive for longer than anticipated.

Before the CPI report, market participants received the April Producer Price Index (PPI). The headline inflation readings were hotter-than-expected, up 0.5% month-over-month for total PPI and core PPI versus an expected 0.3% and 0.2%, respectively, but the sizable downward revisions to last month's readings kept the market response more mixed rather than negative.

Fed Chair Powell called the data "quite mixed" in a moderated discussion at the Foreign Bankers' Association's annual meeting.

Meme stocks exhibited a resurgence following the first X post by "Roaring Kitty" in three years. Shares of GameStop and AMC Entertainment were beneficiaries from speculative buying interest, jumping 27.2% and 51.2%, respectively, this week. 

In other corporate news, Dow component Home Depot received a negative response to its earnings report that stemmed from disappointing sales activity at the home improvement retailer.

• S&P 500: +1.5% for the week / +11.2% YTD

• Nasdaq Composite: +2.1% for the week / +11.2% YTD

• S&P Midcap 400: +0.7% for the week / +8.4% YTD

• Dow Jones Industrial Average: +1.2% for the week / +6.1% YTD

• Russell 2000: +1.7% for the week / +3.4% YTD

Market Recap - Busy Week Ends with Gains

The Stock Market Exhibit Somewhat Mixed Action This Week Amid A Slate Of Earnings News And Market-Moving Economic Releases.

Ultimately, the major indices all settled with gains on the week. The Russell 2000 is positive on the year following a 1.7% gain since last Friday.

Gains in the mega cap space had an outsized influence on index performance this week.

Apple and Amazon.com were standout winners in the mega cap space this week following pleasing earnings and outlook. Apple shares gained 8.3% and Amazon shares increased by 3.7%. 

Market participants were also digesting mixed economic releases. The Employment Cost Index for Q1 reflected a 1.2% increase in compensation costs versus expectations for a 1.0% increase. This report piled onto emerging worries about sticky inflation and about the Fed pushing back its rate cut timeline.

Fed Chair Powell calmed some of those fears during his press conference where he stated that it was "unlikely that the next policy rate move will be a hike." This followed the FOMC's unanimous decision to leave the fed funds rate range at 5.25-5.50%, as expected, noting that there has been a lack of further progress toward reaching the inflation target in recent months.

Friday's release of the April employment report was met with positive action. The report was weak enough to reduce concerns about a potential rate hike, but not weak enough to invite worries about the state of the labor market.

Nonfarm payrolls increased a smaller-than-expected 175,000 (Briefing.com consensus 250,000), average hourly earnings were up a smaller-than-expected 0.2% (Briefing.com consensus 0.3%), the unemployment rate was up a higher-than-expected 3.9% (Briefing.com consensus 3.8%), and the average workweek was a smaller-than-expected 34.3 hours (Briefing.com consensus 34.4).

Treasury yields settled the week lower in response to the data, acting as support for equities. The 10-yr note yield declined 17 basis points this week to 4.50%. The 2-yr note yield declined 19 basis points this week to 4.81%.

Only three of the S&P 500 sectors logged declines this week while the utilities (+3.4%) and consumer discretionary (+1.6%) sectors saw the largest gains. The energy sector was the weakest performer by a wide margin, dropping 3.4% as oil prices settled back below $80.00/bbl, down nearly 7.0% to $78.05./bbl. 

Also, the S&P 500 and Nasdaq Composite faced a technical overhang this week as the indices approached their respective 50-day moving averages. The S&P 500 was just a whisker shy of its 50-day moving average (5,129) at Friday's close while the Nasdaq Composite closed above its 50-day moving average (16,057). 

• Nasdaq Composite: +1.4% for the week / +7.6% YTD

• S&P 500: +0.6% for the week / +7.5% YTD

• S&P Midcap 400: +1.2% for the week / +5.3% YTD

• Dow Jones Industrial Average: +1.1% for the week / +2.6% YTD

• Russell 2000: +1.7% for the week / +0.4% YTD

Market Recap - STOCKS REBOUND AS EARNINGS SEASON RAMPS UP

The Stock Market Exhibited Some Rebound Action After A Soft Start To The Month. It Was A Busy Week, Featuring Earnings Results From Nearly 40% Of The S&P 500 And Some Key Economic Releases.

The Dow Jones Industrial Average rose 0.7%, the S&P 500 gained 2.7%, and the Nasdaq Composite settled 4.2% higher this week. 

The upside bias was fueled by favorable responses to earnings from some influential names, calm price action in Treasuries, and carryover momentum as gains built up this week.

Broad buying activity left the equal-weighted S&P 500 up 1.6% this week and all 11 S&P 500 sectors finished higher. Mega cap gains had an outsized impact on index performance, though, and drove gains in the information technology (+5.1%), consumer discretionary (+3.5%), and communication services (+2.7%) sectors. 

Meta Platforms was an exception from the mega cap space, dropping 7.9% this week after reporting earnings. Microsoft, Alphabet, which hit a new all-time high, and Tesla gained 1.8%, 11.5%, and 14.4%, respectively, in response to their earnings news. 

The quarterly reports from some of the aforementioned names fueled positive buzz around AI, benefitting stocks in the chipmaker space. The PHLX Semiconductor Index (SOX) jumped 10% this week. 

Market participants were also digesting the Advance Q1 GDP report, which showed weaker growth and higher inflation, and the weekly jobless claims report, which showed ongoing strength in the labor market, and the March Personal Income and Spending report, which that showed solid spending activity, but stalled progress on inflation. 

Treasuries had a relatively calm response to the data, contributing to the upside bias in stocks. The 10-yr note yield was five basis points at 4.67% and the 2-yr note yield rose three basis points to 5.00%. 

• S&P 500: +2.7% for the week / +6.9% YTD

• Nasdaq Composite: +4.2% for the week / +6.1% YTD

• S&P Midcap 400: +2.1% for the week / +4.1% YTD

• Dow Jones Industrial Average: +0.7% for the week / +1.5% YTD

• Russell 2000: +2.8% for the week / -1.2% YTD

Market Recap - RATE CUT ENTHUSIASM DRIVES STRONG GAINS

The Stock Market Had A Strong Showing This Week, Which Drove The Three Major Indices To Fresh Record Highs.

The S&P 500 for its part closed above 5,200 for the first time with a 2.3% gain this week. The Nasdaq Composite jumped 2.9% and the Dow Jones Industrial Average gained 2.0%.

The gains were largely in response to the FOMC policy announcement. The committee voted unanimously to leave the target range for the fed funds rate unchanged at 5.25-5.50%. This was expected and was not the reason for increased buying activity.

Buying increased due to the closely-watched dot plot, which is included in the updated Summary of Economic Projections (SEP), showing that the Fed still anticipates three rate cuts this year despite recent inflation readings coming in hotter than expected.

Fed Chair Powell's press conference following the FOMC policy announcement didn't deter the influx of buying. He largely reiterated prior comments, indicating that the Fed needs more evidence that inflation is moving toward the 2% target before cutting rates. Mr. Powell also said that it will be appropriate to slow the pace of asset runoff fairly soon.

Rate cut expectations moved up this week, contributing to the positive bias in the stock market. The implied likelihood of a June cut rose to 75.4% from 58.8% last week, according to the CME FedWatch Tool.

The price action in Treasuries also contributed to the positive bias in the stock market. The 2-yr note yield declined 12 basis point to 4.60% and the 10-yr note yield fell eight basis points to 4.22%.

Mega cap stocks had an outsized impact on index gains.

Only one of the S&P 500 sectors logged a decline -- real estate (-0.4%) -- while the communication services (+4.8%), industrials (+2.9%), information technology (+2.9%), and consumer discretionary (+2.8%) sectors saw the largest gains. 

• S&P 500: +2.3% for the week / +9.7% YTD

• Nasdaq Composite: +2.9% for the week / +9.4% YTD

• S&P Midcap 400: +2.3% for the week / +7.5% YTD

• Dow Jones Industrial Average: +2.0% for the week / +4.7% YTD

• Russell 2000: +1.6% for the week / +2.2% YTD

Market Recap - BUSY WEEK FUELS SHARP DECLINES

The Stock Market Closed With Solid Losses This Week. Market Participants Had A Lot To Digest On This Busy Week In Terms Of Market-Moving Events.

The added sticking point for the geopolitical angst, which was related to reports that Iran could soon attack Israel, was uncertainty related to the weekend and the potential that investors would not be able to react in real-time to any potential developments. 

The negative bias in the stock market began before the aforementioned reports, however. The market did not react favorably to a hotter than expected March Consumer Price Index (CPI). Total CPI increased 0.4% month-over-month versus an expected 0.3% increase and core-CPI, which excludes food and energy, increased 0.4% month-over-month versus an expected 0.3% increase.

The Producer Price Index (PPI) was cooler-than-expected on a month-over-month basis (actual 0.2%; expected 0.3%), but total PPI still accelerated to 2.1% in March from 1.6% in February.

These reports fueled worries about ongoing hawkishness from the FOMC and drove participants to rethink rate cut expectations. The probability of a rate cut at the June FOMC meeting collapsed to just 27.7% versus 69.3% one month ago. 

The market's expectations at the start of the year were for six rate cuts by the end of 2024, but the sudden change this week leaves the market with only two expected rate cuts now.

Treasury yields turned sharply higher in response to the data, and in response to a slate of weak Treasury auctions. There was a $58 billion 3-yr note auction on Tuesday, a $39 billion 10-yr note auction on Wednesday, and a $22 billion 30-yr bond auction on Thursday. 

The 10-yr note yield jumped 12 basis points to 4.50% and the 2-yr note yield, which is most sensitive to changes in the fed funds futures rate, jumped 15 basis points to 4.88%.

This week's losses follows a soft start to the Q1 earnings reporting period. JPMorgan Chase CEO Jamie Dimon made some cautious-sounding macro comments and the bank left its net interest income guidance for 2024 unchanged from its prior view. Citigroup and Wells Fargo also logged declines after their earnings results.

The weakness in bank stocks led the S&P 500 financials sector to decline 3.6% this week. It was the worst performer, but all 11 S&P 500 sectors logged declines. The real estate (-3.1%) sector was another top laggard, clipped by the jump in market rates. The materials (-3.6%) and health care (-3.1%) sectors also fell more than 3.0%. 

• Nasdaq Composite: -0.5% for the week / +7.8% YTD

• S&P 500: -1.6% for the week / +7.4% YTD

• S&P Midcap 400: -2.9% for the week / +4.3% YTD

• Dow Jones Industrial Average: -2.4% for the week / +0.8% YTD

• Russell 2000: -3.0% for the week / -1.2 YTD

Market Recap - CHOPPY START TO SECOND QUARTER AMID RISING RATES

The Stock Market Started The Second Quarter With Volatile Price Action Following A Strong Start To The Year.

Ultimately, the major indices settled with decent losses. The Dow Jones Industrial Average (-2.3%) and Russell 2000 (-2.9%) each fell more than 2.0% and the S&P 500 and Nasdaq Composite declined 1.0% and 0.8%, respectively. 

The downside bias was related to a sharp increase in market rates amid some solid economic data and sticky inflation figures. The 10-yr note yield jumped 12 basis points to 4.33% and the 2-yr note yield rose 10 basis points to 4.72%.

The February Personal Spending and Income report, released last Friday when markets were closed, showed some sticky inflation figures in the form of the PCE Price Indexes. Some of this week's data, which included the

March ISM Manufacturing Index and the March employment report, reflected ongoing strength in the economy. The March ISM Non-Manufacturing PMI and weekly jobless claims report showed some softening, though. 

Market participants were recalibrating rate cut expectations following this week's data and some commentary from Fed officials. Minneapolis Fed President Kashkari (not an FOMC voter) was among the Fed officials to draw attention, saying it's possible the Fed might not cut rates this year if progress on inflation stalls. The implied likelihood of a rate cut in June is now essentially a toss up, having fallen to just 52.4% from 60.4% one week ago.

Increased geopolitical tensions in the Middle East related to a potential retaliation by Iran against Israel also contributed to the negative bias this week, in addition to some normal consolidation efforts after the strong start to the year. 

Just about everything participated in this week's losses. Nine of the 11 S&P 500 sectors finished lower. The health care sector (-3.1%) saw the steepest decline after the CMS left its originally proposed payment rate increase for Medicare Advantage plans for 2024-2025 unchanged at 3.70% against expectations for an increase. The real estate (-3.0%) and consumer staples (-2.7%) sectors were also notable laggards. 

Meanwhile, the energy (+3.9%) and communication services (+2.5%) sectors were alone with gains at the end of the week.

• S&P 500: -1.0% for the week / +9.1% YTD

• Nasdaq Composite: -0.8% for the week / +8.2% YTD

• S&P Midcap 400: -1.9% for the week / +7.5% YTD

• Dow Jones Industrial Average: -2.3% for the week / +3.2% YTD

• Russell 2000: -2.9% for the week / +1.8% YTD

Market Recap - STOCKS HOLD STEADY AT RECORD HIGHS

The Major Indices Mostly Settled This Week Little Changed From Last Week, Except The Russell 2000, Which Continued Its Recent Outperformance And Jumped 2.5% This Week

There wasn't a big push to buy following solid gains last week, but importantly, there wasn't a big rush to sell either. The S&P 500 logged another record high close on Thursday ahead of the extended-holiday weekend.

Thursday's session was also the final trading day of the first quarter, which contributed to the muted index-level activity throughout the week due to the understanding that many stocks sit at or near all-time highs.

Bond and equity markets are closed on Friday for Good Friday, but there is still a slate of economic data to get through. The February Personal Income and Spending report, which features the Fed's preferred inflation gauge in the form of the PCE Price Indexes, will be released at 8:30 ET. Other data include the February advance goods trade deficit, advance Wholesale Inventories, and advance Retail Inventories at 8:30 ET.

Relative weakness in the mega cap and semiconductor spaces also played a role in limiting index-level moves this week. Some names in these spaces have exhibited a huge rise since the start of the year, so this price action reflected some normal consolidation activity.

The PHLX Semiconductor Index (SOX) fell 0.1% following news that China will not allow chips from AMD (AMD) and Intel (INTC) to be used in government computers.

Meanwhile, the equal-weighted S&P 500 jumped 1.6% this week. Only two S&P 500 sectors closed lower this week -- communication services (-0.8%) and information technology (-1.3%) -- while three sectors logged gains greater than 2.0%. The top performers were the utilities (+2.8%), real estate (+2.2%), and energy (+2.2%) sectors.

In corporate news, Dow component Boeing (BA) announced that CEO Dave Calhoun plans to step down as CEO at the end of 2024.

• S&P 500: +0.4% for the week / +10.2% YTD

• S&P Midcap 400: +1.8% for the week / +9.5% YTD

• Nasdaq Composite: -0.3% for the week / +9.1% YTD

• Dow Jones Industrial Average: +0.8% for the week / +5.6% YTD

• Russell 2000: +2.5% for the week / +4.8% YTD