The city of Las Vegas is buzzing with the Super Bowl here this week! Allegiant Stadium is set to host the first-- of hopefully many-- Super Bowls here locally on Sunday. Unfortunately for the Raiders, their stadium is hosting their two biggest rivals, the Kansas City Chiefs and the San Francisco 49ers. We're sure they are rooting for both teams to lose, but who do you have winning the big game?
And now onto the weekly recap:
It was another winning week for the stock market. Small cap stocks saw some rebound action after underperforming to start the year. The Russell 2000 jumped 2.4% this week. The S&P 500 closed above 5,000 for the first time, drawing support from gains in the mega cap and semiconductor spaces. The Vanguard Mega Cap Growth ETF (MGK) rose 2.6% on the week and the PHLX Semiconductor Index (SOX) rose 5.3%.
Many stocks participated, though, in a relatively broad advance. The equal-weighted S&P 500 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 for the upside price action 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) were some of the more influential earnings-related laggards.
Notably, this week's broad advance occurred despite sharp declines in Treasuries. 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%.
The increased selling in Treasuries started last week in response to ongoing strength in economic data of late that has the market repricing rate cut expectations. This also followed comments from Fed Chair Jerome Powell last weekend, who said on60 Minutesthat 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.
Also, the annual CPI revisions were released this week, garnering added attention due to potential implications for the Fed's rate cut path. The revisions were relatively friendly since they did not alter the market's view on inflation much.
Treasuries did not respond favorably to this week's slate of strong auctions, including a $25 billion 30-yr bond offering, a $54 billion 3-yr note sale, and $42 billion 10-yr note auction.
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.
Below are truncated summaries of the daily action this week:
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.