With the excitment of the Super Bowl behind us we settle into late winter with an eye on spring coming here in the valley shortly. From most accounts the first Super Bowl we have hosted here in Las Vegas was a resounding success. The game brought plenty of excitment including just the seocnd overtime game in Super Bowl history, and the excitment felt around the valley was palpable. How did the first Super Bowl here impact you and what were some positives or negatives you felt throughout the process?
And now onto the weekly recap:
The stock market experienced mixed price action this week. Tuesday's trade featured a broad, sharp retreat in response to a hotter than expected CPI (actual 0.3%; Briefing.com consensus 0.2%) and core CPI (actual 0.4%; Briefing.com consensus 0.3%) for January, which also sent Treasury yields sharply higher. By the end of the week, however, the major indices managed to win back a lot of that lost ground.
The Russell 2000, for example, sank 4% on Tuesday, but ultimately settled 1.1% higher on the week. The market-cap weighted S&P 500 declined 0.4% this week, but the equal-weighted S&P 500 jumped 0.7%.
Only four of the 11 S&P 500 sectors closed lower than Friday while five of them climbed more than 1%. The heavily-weighted information technology sector saw the sharpest drop, down 2.5%, followed by the communication services sector, which fell 1.6%. On the flip side, the materials (+2.4%) and energy (+2.2%) sectors saw the biggest gains.
The stock market was not spooked by this week's slate economic data, holding onto to hope that inflation will continue to go the market's way, that the macroenvironment will remain strong, and that the Fed will cut rates sooner rather than later.
In addition to the hot CPI reading, market participants also digested a below-consensus Retail Sales report for January, an unexpected drop in jobless claims to 212,000, and a hotter-than-expected PPI report for January. The 2-yr note yield settled 15 basis points higher this week to 4.65% in response to this week's data and the 10-yr note yield rose 11 basis points this week to 4.30%.
Coming into the week, there was a growing sense among some participants that stocks were overbought in the short-term and due for some consolidation. The market has been on a huge run since late October that had the S&P 500 and Dow Jones Industrial Average near all-time highs coming into the week.
The move off late-October lows has been paced by gains in the mega cap space, so it makes sense that some mega caps suffered outsized losses this week due to profit-taking activity. The Vanguard Mega Cap Growth ETF (MGK) logged a 1.4% decline. Amazon.com (AMZN) and Microsoft (MSFT) were losing standouts in the mega cap space, dropping 2.8% and 3.9%, respectively, this week. AMZN and MSFT and still up 11.6% and 7.5% in 2024.
As a reminder, bond and equity markets are closed on Monday for Presidents Day.
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.