EZBites~week ending January 19, 2024
LAST WEEK:
DOW:+0.7% (YTD:+0.5%)
NASDAQ:+2.3% (YTD:+2.0%)
S&P:+1.2% (YTD:+1.5%)
The shortened week closed on a strong note. The S&P 500 is sitting at a fresh record high (4,839.81) and is up 1.5% for the year. The Nasdaq Composite is up 2.0% for the year thanks to this week's gain and the Dow Jones Industrial Average is up 0.5%.
Gains were largely driven by outperforming mega cap and semiconductor shares. The PHLX Semiconductor Index jumped 8.0% this week and the Vanguard Mega Cap Growth ETF (MGK) logged a 2.5% gain. NVIDIA (NVDA) was a standout winner in that respect, registering a 8.7% gain.
The broader market saw softer price action due to rising market rates as participants recalibrated rate cut expectations due to comments from some Fed officials and more strong economic data that is not likely to persuade the Fed to cut rates as soon, or as much, as the market hoped. The 2-yr note yield jumped 26 basis points to 4.41% and the 10-yr note yield climbed 20 basis points to 4.15%.
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Fed Governor Waller (FOMC voter) indicated that the Fed could begin cutting rates this year, but reiterated the Fed's estimate for three cuts rather than six cuts that the market expects.
The December Retail Sales report, the Housing Starts data for December, and weekly initial jobless claims were all stronger than expected and the preliminary reading of the University of Michigan's Consumer Sentiment Index for January was well ahead of estimates, hitting its highest level since July 2021 with year-ahead inflation expectations decelerating to 2.9% from 3.1%, a rate not seen in just over three years.
Market participants were also digesting more earnings results from the likes of Goldman Sachs (GS), Morgan Stanley (MS), and Dow component Travelers (TRV), which garnered mixed reactions.
Five of the 11 S&P 500 sectors registered gains this week. The heavily-weighted information technology sector was the top gainer by a wide margin, jumping 4.3% thanks to the strength in NVDA and its other mega cap components. Meanwhile, the rate-sensitive utilities (-3.7%) and real estate (-2.1%) sectors saw some of the largest declines.
February EZTracker Newsletters come out ?Sunday, January 28, 2024