The Week in Review: 05/13/2024

“Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.” - Peter Lynch

Good Morning ,

The major indices all logged gains this week.

The S&P 500, which ran into resistance at 5,200 on Tuesday. But managed closing above that level for the first time since April 9, registering a 1.9% gain last week. The Nasdaq Composite logged a 1.1% gain and the Dow Jones Industrial Average saw a 2.2% increase.

Last week's action left the S&P 500 and Nasdaq Composite less than 1.0% away from their record closing highs.

Many stocks participated in the broad advance, leaving the equal-weighted S&P 500 up 2.0% for the week and all 11 S&P 500 sectors in the green.

The utilities sector saw the largest gain, jumping 4.0%, followed by the financials (+3.1%), materials (+2.6%), consumer staples (+2.3%), and industrial (+2.3%) sectors.

The consumer discretionary sector was the only sector to gain less than 1.4% this week, closing 0.2% higher than last Friday.

Upside moves last week were driven by carryover momentum from the post-FOMC rally that has fueled recent gains, along with a pull to retest all-time highs for the S&P 500 and Nasdaq Composite.

It was a quiet week in terms of economic releases, capped off by Friday's release of the preliminary University of Michigan Index of Consumer Sentiment for May at 10:00 ET. That report dropped to 67.4 in May (expected 76.5; prior 77.2) and showed a jump in year-ahead inflation expectations to 3.5% from 3.2%.

Stocks had a muted, yet slightly negative response to the report. Last week was also quiet in terms of earnings news.

Dow component Walt Disney was a standout, dropping 6.9% last week following its earnings report. Uber was another notable laggard, dropping 3.2% last week on its earnings news.

Calm activity in Treasuries provided support to equities last week.

The 10-yr note yield settled unchanged this week at 4.50%, and the 2-yr note yield settled six basis points this week to 4.87%.

Market Snapshot…

• Oil Prices – Oil prices fell by almost $1 barrel on the prospect of higher interest rates. West Texas Intermediate crude shed 1.26% to $78.26 a barrel, while Brent crude futures settled down 1.3% at $82.79 a barrel.
• Gold– Gold prices climbed on Friday, in route to their best week in five, with zero-yield bullion building on momentum fueled by weaker U.S. jobs data this week. Spot Gold rose 1% to $2,369.49 per ounce. U.S. gold futures settled 1.5% higher to $2,375.00 per ounce. Silver finished the week at $28.506.
• S. Dollar– The dollar inched higher on Friday, strengthening 0.26% to 155.86 against the Japanese Yen, and was up about 1.9% on the week. The dollar index, which measures the greenback against a basket of currencies, gained 0.09% to 105.31. Euro/US$ exchange rate is now 1.082.
• S. Treasury Rates– U.S. Treasury yields were higher on Friday as traders digested downbeat consumer sentiment data. The U.S. 10-year Treasury yield added more than 5 basis points to trade at 4.5%.
• Asian shares were mostly lower in overnight trading.
• European markets are trading down.
• Domestic markets are trading higher again this morning.

Earnings continue to be better than expected…

We're nearing the end of the first quarter’s earnings season. With 92% of S&P 500 companies reporting, overall results have been much better than expected. According to Factset, the year-over-year earnings growth rate for S&P 500 companies is 5.4%, the highest since the second quarter of 2022.

Even though the earnings season is nearly over, there are still several names left to report. This week we will hear from Cisco, Home Depot, Walmart, and Deere.

All eyes will be on April’s PPI and CPI reports on Tuesday and Wednesday, respectively. There will also be a plethora of FOMC member’s speaking at various events, which could give some insight into individual assessment of economic trends outside of the latest FOMC decision to hold rates steady.

We'll also receive April’s retail sales report on Wednesday and industrial and manufacturing production report on Thursday.

Have a great week!!!

The opinions expressed herein are those of Michael Hilger and not necessarily those of Raymond James & Associates, Inc., and are subject to change without notice. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur.  The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
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