EZBites~week ending February 9, 2024
DOW:0.0% (YTD:+2.6%)
NASDAQ:+2.3% (YTD:6.5%)
S&P:+1.4% (YTD:+5.4%)
It was another winning week for the equity markets. Small-cap stocks saw some rebound action after underperforming to start the year, as the Russell 2000 jumped 2.4% this week. The S&P 500 closed above 5,000 for the first time ever, drawing support from Mega-cap and semiconductor spaces.
Many stocks participated, though, in a relatively broad advance, as shown by gains in the equal-weighted S&P 500, which gained 0.5% this week. There still has not been any concerted selling interest despite reports that the market is overbought in the short-term, which has acted as its own upside catalyst.
Another catalyst came in the form of positive responses to some earnings news: ?Ford (F),? Eli Lilly (LLY), DuPont (DD), Arm Holdings (ARM), and Walt Disney (DIS) were among the standout earnings-related winners this week.
Meanwhile, Amgen (AMGN) and PayPal (PYPL) lagged.
Notably, this week's broad advance occurred despite sharp declines in Treasury prices (and increases in yields). The 2-yr note yield rose 12 basis points to 4.50% and the 10-yr note yield rose 16 basis points to 4.19%.
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The increased selling in Treasuries started last week in response to ongoing strength in economic data of late that has the market re-pricing rate cut expectations. This also followed comments from Fed Chair Jerome Powell last weekend, who said that the Fed needs to see more evidence that inflation is moving sustainably down to its 2% target before lowering rates.
This week's release of the January ISM Services PMI featured an acceleration in services sector activity in January, replete with a pickup in new orders, employment, and prices. The weekly jobless claims report showed a decrease in the number of claims.
The probability of a 25 basis points rate cut to 5.00-5.25% at the May FOMC meeting is 63.1% now, down from 73.2% one week ago, according to the CME FedWatch Tool.
Our March EZTracker Newsletters come out Sunday, February 25, 2024