Market Recap - S&P 500, DJIA at New All-Time Highs After Winning Week

The stock market closed out another winning week with the S&P 500 and Dow Jones Industrial Average at fresh record highs.

The Russell 2000 (1.9%) pacing index gains, the S&P 500 settled 0.9% higher, the Nasdaq Composite jumped 0.8%, and the Dow Jones Industrial Average rose 1.0%.

Gains were relatively broad based, driven by ongoing momentum as stocks continue to hit new record highs. The equal-weighted S&P 500 settled 1.1% higher than last Friday.

Semiconductor stocks were a pocket of weakness in a mostly upbeat tape. The PHLX Semiconductor Index (SOX) dropped 2.4% this week in response to a Bloomberg report that the Biden administration is looking at curbing sales of advanced AI chips to certain countries, with a focus on Persian Gulf countries, and in response to ASML's (ASML) Q3 results.

The semiconductor equipment maker's results were released early and disappointed investors due to below‐consensus EPS, revenues, and net bookings. The company also issued weaker-than-expected FY25 revenue guidance saying, "While there continue to be strong developments and upside potential in AI, other market segments are taking longer to recover."

Taiwan Semiconductor Manufacturing Company (TSM) reported pleasing Q3 results, along with better-than-expected Q4 guidance, which stirred some buy-the-dip interest in the space by the end of the week.

A lot of the earnings news this week was well received, contributing to the overall positive bias. Dow component UnitedHealth (UNH) was an exception, registering a sharp decline after reporting its third quarter earnings, which featured an increase in its medical care ratio, and issuing some tepid FY25 earnings guidance.

This price action impacted the S&P 500 health care sector's performance. It was one of two sectors to close lower this week. The only other sector to log a decline was energy (-2.6%), which was reacting to a drop in oil prices. WTI crude oil futures settled Friday at $68.62/bbl.

The financial sector was a top performer as investors digested a slate of earnings news from the space. Morgan Stanley (MS) and Goldman Sachs (GS) were some of the standouts in that respect.

Market participants were also weighing the notion that the Fed won't be as aggressive as previously thought after more solid economic data. This week's releases included September retail sales, which were stronger than expected, and initial jobless claims, which were not as bad as feared.

• Nasdaq Composite: +0.8% for the week / +23.2% YTD

• S&P 500: +0.9% for the week / +23.0% YTD

• Dow Jones Industrial Average: +1.0% for the week / +14.8% YTD

• S&P Midcap 400: +1.4% for the week / +15.0% YTD

• Russell 2000: +1.9% for the week / +12.3% YTD

Market Recap - Data-heavy Week Ends with Solid Gains

It was a somewhat choppy week for stocks.

The major indices exhibited up and down action, ultimately rallying on Friday. The S&P 500 and Dow Jones

Industrial Average set record highs. The market placed geopolitical worries, along with concerns about Hurricanes Milton and Helene, on the back burner and focused on economic releases and Fed policy instead.

The September Consumer Price Index report was hotter-than-expected at the headline (actual 0.2%; expected 0.1%) and core (actual 0.3%; expected 0.2%) level. The year-over-year growth rate of core CPI increased to 3.3% from 3.2% in August and the growth rate of headline CPI slowed to 2.4% from 2.5% in August.

Some positive news from the report was that the shelter component, which has been the biggest driver of core inflation, saw its smallest increase (+0.2%) since June. Investors also received weekly jobless claims, which totaled 258,000 versus last week's count of 225,000.

Other data included the September Producer Price Index and preliminary consumer sentiment data from October, which also supported the idea that the Fed will continue cutting rates.

The market didn't react much to the minutes for the September 17–18 FOMC meeting, which didn't contain any surprises. The minutes showed that almost all participants saw upside risks to the inflation outlook as having diminished, while downside risks to employment were seen as having increased.

By the end of the week, market participants were digesting some earnings results from influential names in the financial space. JPMorgan Chase (JPM), Wells Fargo (WFC), and BlackRock (BLK) all received positive responses to their earnings results.

• Nasdaq Composite: +1.1% for the week / +22.2% YTD

• S&P 500: +1.1% for the week / +21.9% YTD

• Dow Jones Industrial Average: +1.2% for the week / +13.7% YTD

• S&P Midcap 400: +1.1% for the week / +13.4% YTD

• Russell 2000: +1.0% for the week / +10.2% YTD

Market Recap - Choppy Start to Fourth Quarter

The stock market traded lower through most of the week.

The market slid under selling interest that was sparked by general profit-taking efforts after a big run in the third quarter and some nervousness related to a worsening geopolitical environment after Iran fired missiles at Israel, which prompted a vow of retaliation.

The geopolitical angst manifested in rising oil prices. WTI crude oil futures settled at $68.15/bbl last Friday and jumped to $74.40/bbl this Friday. This price action boosted the S&P 500 energy sector, which jumped 7.0% this week.

The three major indices managed to close fractionally higher than last Friday thanks to a rally driven by Friday's release of the September Employment Situation Report.

The report showed stronger than expected hiring, a drop in unemployment, and a rise in average hourly earnings. This was consistent with the market's soft landing narrative, which led to a recalibration in rate cut expectations due to the notion that the Fed won't have to act as aggressive going forward compared to the September meeting.

The likelihood of a 50-basis points rate cut at the November FOMC meeting dropped to 0.0% on Friday, down from 32.1% Thursday and 53.3% a week ago, according to the CME FedWatch Tool.

Market participants were also dealing with growth concerns initially that were stirred by the start of the East Coast and Gulf Coast dockworkers strike. The strike was resolved, at least temporarily, by the end of the week.

Treasury yields moved sharply higher this week. The 10-yr yield jumped 23 basis points to 3.98% and the 2-yr yield settled 37 basis points higher at 3.93%.

• Nasdaq Composite: +0.1% for the week / +20.8% YTD

• S&P 500: +0.2% for the week / +20.6% YTD

• Dow Jones Industrial Average: +0.1% for the week / +12.4% YTD

• S&P Midcap 400: ‐0.03% for the week / +12.1% YTD

• Russell 2000: ‐0.5% for the week / +9.2% YTD

Market Recap - Spotlight seized by stimulus news from China

The market's attention was largely focused on China during the past week.

The country's officials announced a raft of measures aimed at boosting consumption, property demand, and stock market liquidity. The People's Bank of China lowered its reserve requirement ratio, the repurchase rate, the medium‐term lending facility rate, and hinted at a potential cut to the loan prime rate. A flood of fiscal spending was also announced with upcoming bond issuance expected to reach roughly half of the amount spent to counter the Great Financial Crisis.

Chinese equities soared in response with the Shanghai Composite and Hong Kong's Hang Seng jumping 13.0% for the week while risk assets in Europe and the U.S. also showed strength, though ongoing pressure on the price of crude kept growth concerns at the back of the market's mind.

There was also renewed strength in semiconductor names after Micron (MU) beat quarterly expectations and issued strong guidance. The stock rallied to a two‐month high, taking the PHLX Semiconductor Index for the ride (+4.3% for the week).

Longer-dated Treasuries ended the week with slight losses while the 2-yr note eked out a gain as rate cut expectations increased. At the end of the week, the fed funds futures market was pointing to a 54.8% implied likelihood of another 50-basis point cut in November, up from 50.4% a week ago.

• Nasdaq Composite: +1.0% for the week / +20.7% YTD

• S&P 500: +0.6% for the week / +20.3% YTD

• S&P Midcap 400: +0.5% for the week / +12.1% YTD

• Dow Jones Industrial Average: +0.6% for the week / +12.2% YTD

• Russell 2000: -0.1% for the week / +9.7% YTD

Market Recap - Another Winning Week After Outsized Rate Cut

It was another strong week for stocks.

Early in the week, gains were fueled by optimism about the Fed cutting rates by 50 basis points. The Fed delivered and gains continued until Friday, when the market closed flattish as participants digested the solid run in equities. Friday's session was also a "quadruple witching" quarterly expiration of stock options, index options, single stock futures, and index futures.

The Federal Open Market Committee (FOMC) voted in favor of cutting the target range for the fed funds rate by 50 basis points to 4.7%-5.00%. It was not a unanimous vote. Fed Governor Bowman preferred a 25-basis points rate cut.

The directive indicated that the Committee has "gained greater confidence that inflation is moving sustainably toward 2 percent, and judges that the risks to achieving its employment and inflation goals are roughly in balance."

The Summary of Economic Projections showed a shift in the median estimate for the 2024 unemployment rate to 4.4% (from 4.0% in June) and a downward shift in PCE inflation to 2.3% (from 2.6% in June) and core-PCE inflation to 2.6% (from 2.8%). The dot-plot, meanwhile, shows a median estimate for 2024 (4.40%) that implies another 50 basis points of rate cuts this year and another 100 basis points in 2025.

Fed Chair Powell defended the larger, 50-basis points cut as a proper "recalibration" to make sure the labor market and the economy remain in a solid condition and that the intent of the more aggressive move is to make sure they remain there. He also said that the Fed doesn't feel like it is behind the curve with its policy rate and that the larger cut can be construed as a sign of the Fed's commitment not to get behind.

This thinking drew in buyers, along with a fear of missing out on further gains. The S&P 500 and Dow Jones Industrial Average reached fresh record highs in the wake of the Fed's latest decision.

This week's data largely corroborated the market's thinking that the Fed can orchestrate a soft landing for the economy. Retail sales and industrial production were both stronger than expected in August, weekly jobless claims remain steady below recession-like levels, and the Philadelphia Fed Index tipped back into expansion (i.e. above 0.0 reading) in September.

Only three S&P 500 sectors settled lower. The defensive-oriented health care (-0.6%) and consumer staples (-1.2%) sectors were among the laggards.

Meanwhile, the energy (+3.8%), communication services (+3.7%), and financial (+2.4%) sectors were the top performers.

• S&P 500: +1.4% for the week / +19.6% YTD

• Nasdaq Composite: +1.5% for the week / +19.6% YTD

• Dow Jones Industrial Average: +1.6% for the week / +11.6% YTD

• S&P Midcap 400: +2.3% for the week / +11.6% YTD

• Russell 2000: +2.1% for the week / +9.9% YTD

Market Recap - Rebounding After Last Week's Slump

The stock market rebounded following last week's big declines.

Buy-the-dip interest was a support factor, along with upside momentum acting as its own catalyst by the end of the week. Many stocks participated, but mega caps and semiconductor shares had an outsized impact on index gains.

The PHLX Semiconductor Index (SOX) surged 10.0%. NVIDIA (NVDA) was a standout performer, bouncing 15.8% following last week's slide.

Things looked a little shaky on Wednesday after the August Consumer Price Index stoked selling interest due to the understanding that core-CPI, which excludes food and energy, remained above the Fed's 2.0% target at 3.2% year-over-year.

Stocks quickly recovered, though, when the S&P 500 held above last Friday's low (5,402) on Wednesday's initial retreat. The strength in NVIDIA also helped get stocks back on a winning track.

Other data this week garnered muted responses from stocks and bonds. Initial jobless claims were little changed and remain below recession-like levels at 230,000 and the August Producer Price Index reflected moderating inflation at the wholesale level.

Selling interest in recent weeks was partially predicated on concerns about economic growth, but this week's price action signaled a shift in that thinking. Small and mid cap stocks outperformed their larger peers by the end of the week, reflecting the belief that the U.S. economy will enjoy a soft landing and that the Fed will cut rates to secure that soft landing.

Market participants also see a higher likelihood of a 50 basis points rate cut at next week's FOMC meeting compared to one week ago. The fed funds futures market now shows a 45.0% probability of a 50 basis points rate cut in September, up from 30.0% last Friday, according to the CME FedWatch Tool.

The 2-yr yield, which is most sensitive to changes in the fed funds rate, dropped seven basis points this week to 3.58% and the 10-yr yield dropped six basis points to 3.65%.

Only one S&P 500 sector settled lower -- energy (‐0.7%) -- while the information technology sector led the pack by a wide margin, climbing 7.3%.

• S&P 500: +4.0% for the week / +18.0% YTD

• Nasdaq Composite: +6.0% for the week / +17.8% YTD

• Dow Jones Industrial Average: +2.6% for the week / +9.8% YTD

• S&P Midcap 400: +3.2% for the week / +9.1% YTD

• Russell 2000: +4.4% for the week / +7.7% YTD

Market Recap - Short Week, Sizable Losses

September started on a downbeat note for the stock market.

The major indices all registered sizable decline on this holiday‐shortened week. Broad selling activity led the S&P 500 to fall below its 50‐day moving average.

The downside bias was related to normal consolidation activity after a big run. This was sparked by fears about a weakening labor market and economic growth prospects. Friday's release of the August Employment Situation report added to the market's emerging fears.

Hiring activity was lighter than expected in August and there were downward revisions to July and June that left employment 86,000 lower for those months than previously reported. The report also showed that the unemployment rate declined slightly and average hourly earnings increased a stronger than expected 0.4% month‐over‐month.

This week's labor market data included the ADP Employment Change Report for August, which was weaker than expected, and the weekly initial jobless claims report, which was better than expected. Other influential data included the revised Q2 productivity report that showed an upward revision to productivity and a downward revision to unit labor costs, and the ISM Services PMI for August, which was better than expected but little changed from July.

Weakness in the semiconductor space also contributed to the negative bias. The PHLX Semiconductor Index (SOX) dropped 12.2% this week. Broadcom (AVGO) was among the notable names in the space, sliding 15.9% after relatively disappointing guidance that piled onto current fears that the pace of growth is slowing for many richly‐valued semiconductor stocks.

The aforementioned price action led the S&P 500 information technology sector to close 7.1% lower on the week. It was the worst performing sector followed by energy (‐5.6%), communication services (‐5.1%), and materials (‐4.8%).

The only sectors to close higher this week were the rate‐sensitive real estate sector (+0.2%) and the consumer staples sector (+0.6%).

The 10‐yr note yield settled 20 basis points lower at 3.71%. The 2‐yr note yield settled 28 basis points lower at 3.65%.

• S&P 500: ‐4.3% for the week / +13.4% YTD

• Nasdaq Composite: ‐5.8% for the week / +11.2% YTD

• S&P Midcap 400: ‐4.9% for the week / +5.7% YTD

• Dow Jones Industrial Average: ‐2.9% for the week / +7.1% YTD

• Russell 2000: ‐5.7% for the week / +3.2% YTD

Market Recap - Dow Jones Industrial Average Closes Week & Month with a New Record

The Labor Day weekend has arrived.

The stock market put in a lot of work this week, thinking about and reacting to NVIDIA's (NVDA) earnings report, thinking about and reacting to the July Personal Income and Spending Report, thinking about and reacting to results from leading retailers and other high-profile technology companies, and, well, thinking about weekend plans.

It all culminated with the indices closing the week mixed and looking up at the Dow Jones Industrial Average, which settled the week and month at a new record high.

A summation of this week's market action is below.

• S&P 500: +0.2% for the week.... +18.4% YTD

• Nasdaq Composite: ‐0.9% for the week... +18.0% YTD

• S&P Midcap 400: ‐0.1% for the week... +11.1% YTD

• Dow Jones Industrial Average: +0.9% for the week... +10.3% YTD

• Russell 2000: ‐0.05% for the week... +9.4% YTD

Market Recap - Growth Concerns Dissipate, Fueling Strong Rally

The stock market logged solid gains since last Friday.

The Dow Jones Industrial Average and Russell 2000 each closed 2.9% higher, the S&P 500 jumped 3.9%, and the Nasdaq Composite climbed 5.3%.

The volatile action exhibited thus far in August was precipitated by a July jobs report that stirred concerns about a weakening economic environment and labor market. So, this week's release of economic data that had the market feeling good about the economic environment and labor market invited strong buying activity.

The pleasing economic releases included the Producer Price Index for July, which showed disinflation in total and core PPI, the Consumer Price Index for July, which was in-line with expectations, the Retail Sales report for July, which was much better than expected, and the weekly jobless claim report, which reflected ongoing strength in the labor market.

A disappointing housing starts and building permits report for July on Friday didn't deter the strong rally this week.

Solid earnings results and commentary about the consumer from Walmart (WMT), along with Cisco's (CSCO) solid fiscal Q4 operating performance, contributed to the upside bias this week.

In other corporate news, Dow component Home Depot (HD) closed 3.9% higher this week despite reporting below-consensus guidance.

Starbucks (SBUX) was in the headlines after news that CEO Laxman Narasimhan has stepped down and will be replaced by Chipotle (CMG) CEO Brian Niccol.

Kellanova (K) also made news after Mars confirmed it will acquire Kellanova for $83.50/share in cash, or total consideration of $35.9 billion, including debt.

Alphabet (GOOG) settled slightly lower in the week despite other mega caps outperforming after a Bloomberg report that the Department of Justice may be looking at breaking up the company following last week's court ruling that Alphabet violated search-related antitrust laws.

All 11 S&P 500 sectors closed higher led by consumer discretionary (+5.2%), information technology (+7.5%), and financials (+3.2%).

• Nasdaq Composite:+17.5% YTD

• S&P 500: +16.5% YTD

• S&P Midcap 400: +8.3% YTD

• Dow Jones Industrial Average: +7.9% YTD

• Russell 2000: +5.7% YTD

Market Recap - Volatile week ends flattish

Most of the major indices closed this volatile week little changed from last Friday.

The S&P 500 was fractionally lower on the week, the Nasdaq Composite declined 0.2%, the Dow Jones Industrial Average settled 0.6% lower, and the Russell 2000 underperformed, dropping 1.4%.

The week opened with a continuation of the global sell-off that began last week on fears about US economic growth following last Friday's jobs report. Japan's Nikkei slumped 12% on Monday, precipitating a big sell-off in US equities. This huge downturn was related to an unwinding of the yen carry trade as the yen strengthened rapidly against the dollar. 

Monday's sharp moves lower had the S&P 500 flirting with correction territory (i.e. 10% decline from its recent high).

The carry-trade unwinding settled down and the Nikkei jumped over 10% on Tuesday as the yen weakened against the dollar. The market was still worried about the unwinding of carry trades revving back up given how entrenched it had become with Japan holding rates below zero, or near zero, for so long.

The market was also concerned about the U.S. economy slowing more quickly than it had previously believed it would; and it is also concerned about the Fed making (or having already made) a policy mistake by keeping the target range for the fed funds rate unchanged at 5.25-5.50%.

This thinking kept the market in check, yet there were signs that recession fears started to moderate by the end of the week. The Atlanta Fed GDPNow model estimate for real GDP growth in the third quarter was 2.9% in the latest estimate, up from 2.5% on August 1.

A pleasing weekly jobless claims report, which showed initial claims decreasing by 17,000 to 233,000, supported the notion that concerns about a recession were overblown. Market rates jumped in another reflection of moderating recession worries.

The 10-yr note yield rose 15 basis points to 3.94% and the 2-yr note yield jumped 18 basis points to 4.05%. This week's action put some renewed pressure on the 2s10s spread, compressing it by three basis points to -11 basis points.

Earnings season continued this week. Eli Lilly (LLY) was a winning standout, gaining 10.8% in response to blowout earnings and guidance. 

Only four S&P 500 sectors closed with gains. The energy (+1.2%) and industrials (+1.2%) sectors logged the biggest gains followed by communication services (+0.8%) and financials (+0.6%). The materials sector was the worst performer, dropping 1.7%, followed by the consumer discretionary (-1.0%) and utilities (-0.9%) sectors. 

• S&P 500: +11.5% YTD

• Nasdaq Composite:+11.0% YTD

• S&P Midcap 400: +5.6% YTD

• Dow Jones Industrial Average: +4.7% YTD

• Russell 2000: +2.8% YTD