Strong Earnings Send S&P 500 to 5000

February 12, 2024

Market Data as of Week Ending: 2/9/2024 unless noted otherwise

Stock prices moved higher once again as the S&P 500 surpassed the 5,000-point threshold for the first time and marked its 14th positive week out of the past 15. After beginning negative, recent earnings results have shifted expectations markedly with fourth-quarter net income expected to rise 2.9% compared to a year ago. Small-cap stocks rallied, posting a 2.44% gain for the week, outperforming their mid and large cap peers. Growth stocks once again outperformed their value peers as strong earnings results from tech stocks fueled their market leadership. Sector results were mainly positive, with eight of the eleven sectors recording positive results, with outsized gains coming from growthier sectors in information technology and consumer discretionary. Defensive sectors in consumer staples and utilities were negative for the week as the energy sector was slightly negative despite rising oil prices. Developed foreign equities and emerging markets posted positive results but underperformed domestic stocks.

Fixed income performance was predominantly negative as yields rose last week in response to strong economic data along with Fed Chair Powell’s hawkish 60 Minutes interview. The 2-year Treasury yield ended the week up 0.12% to 4.48%, while the 10-year yield rose to 4.17%. Long duration government bonds fared the worst while short duration High Yield bonds outperformed. Yields on U.S. Corporate and High Yield bonds moved slightly, with corporates ending the week higher at 5.31% while High Yield remained at 7.93%.

In what was a relatively light week, economic data was generally favorable. The ISM services index rose to a four-month high of 53.4% as the new orders and employment components increased. The prices paid component jumped 7.3 points to 64.0%, marking a 14-month high. The U.S. trade rose to $62.2 billion in December, but the annual gap fell to the lowest level in 3 years – imports fell 3.6% while exports rose 1.2% in December. Total U.S. consumer credit rose by $1.5 billion in December, well below expectations and the slowest pace of credit growth since August. Weekly jobless claims fell to 218,000, mostly in line with estimates, reflecting the continued resilience of the labor market. China’s consumer price index fell 0.8% in January, marking its fastest decline since 2009.

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