The Vegas Golden Knights went up 2-1 this week in their quest for Lord Stanley's cup. All of us will be cheering them on from afar tonight in hopes that they will be back here on Tuesday with only one win to go.
In Diazo news, this week you should have received an invitation in your inbox to our First Annual Mid-Year Update later this month on June 27th. Please use the RSVP link to provide us with your name and plated meal choice at your earliest convenience. We are excited to host you, and we have a few fun updates to announce. Hope to see you all there!
And now onto the weekly recap:
It was a constructive week for the bulls. The S&P 500 closed Thursday's session (4,293.93) more than 20% above its October closing low, which enables it to meet the technical definition of being in a new bull market. On Friday, the S&P 500 climbed past 4,300 for the first time since August, but it couldn't maintain that position on a closing basis, ultimately settling just a whisker shy of 4,300.
This was the fourth and seventh straight week of gains for the S&P 500 and Nasdaq, respectively.
There was more broad based participation as money rotated out of mega caps and into other areas of the market. The Invesco S&P 500 Equal Weight ETF (RSP) rose 1.0% this week while the Vanguard Mega Cap Growth ETF (MGK) closed down 0.2%. Some of the mega caps fell prone to profit taking after a big run and to some valuation angst.
A notable exception in that regard was Tesla (TSLA), which jumped 14.2% this week and logged its eleventh straight gain on Friday. Some of that strength followed the announcement of a charging network deal with General Motors (GM).
Apple (AAPL), meanwhile, closed flat this week after introducing its Vision Pro mixed reality headset at its Worldwide Developers Conference on Monday.
The market behaved in a manor that suggest participants were hopeful the economy could avoid a hard landing. The Russell 2000, which is predominately comprised of domestically-oriented stocks, outperformed after lagging so far this year. It was the top performing major index with a 1.9% gain.
That outperformance was helped out by strong regional bank shares. The SPDR S&P Regional Banking ETF (KRE) rose 3.0% this week. That move was partially fueled by Goldman Sachs lowering its probability of a recession in the next 12 months to 25% from 35%, citing receding banking risks.
The S&P 500 financials sector was among the top gainers, up 1.1%. Other top performers included the cyclically-oriented industrials (+1.4%) and energy (+1.7%) sectors. Unsurprisingly, the consumer discretionary sector (+2.4%) logged the biggest gain by a decent margin thanks to Tesla.
On the flip side, the information technology (-0.7%) and consumer staples (-0.5%) sectors saw the biggest declines.
Market participants were also reacting to some softer labor data in the form of the weekly initial jobless claims report, which came in at the highest level (261,000) since November 2021. Other notable data this week included the May ISM Non-Manufacturing Index, which fell to 50.3% from 51.9% in April, skirting the dividing line between expansion and contraction (i.e. the 50% level).
Treasuries settled the week with losses. The 2-yr note yield rose 11 basis points to 4.62% and the 10-yr note yield rose six basis points to 3.75%. This comes ahead of the FOMC decision next Wednesday. Presently, the fed funds futures market is pricing in a 28.8% probability of a 25 basis points rate hike for June and a 69.4% probability of a 25 basis points rate hike for July.
In other central bank news, the Bank of Canada surprised market participants with a 25 basis points rate hike to 4.75%.
Below are truncated summaries of daily action:
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.