The Stock Market Logged Gains This Week, Which Brought The S&P 500 To Fresh Record Highs.
Gains were more broad based compared to last week, which featured the outperformance of mega cap stocks. The market-cap weighted S&P 500 climbed 1.1% this week.
The broadening out of buying activity left eight of the 11 S&P 500 sectors higher this week. The energy sector saw the largest gain, jumping 5.2%, followed by the communication services sector, which gained 4.5%. The three laggards to log a decline were consumer discretionary (-1.4%), real estate (-0.5%), and health care (-0.2%).
The consumer discretionary sector was clipped by a big loss in shares of Tesla, which dropped 13.6% this week after disappointing earnings and guidance. Microsoft was a winning standout from the mega cap space, topping a $3 trillion market cap for the first time this week.
Other notable names that disappointed with earnings and/or guidance in addition to Tesla included Humana, 3M, Johnson & Johnson, AT&T, DuPont, and Kimberly-Clark.
Intel, Texas Instruments, and KLA Corporation also sold off after reporting quarterly results, which weighed on the broader semiconductor space and offset earnings-related strength in ASML. The PHLX Semiconductor Index dropped 0.8% this week.
Companies that received positive reactions to earnings results and/or guidance included Netflix, United Airlines, Verizon, and Procter & Gamble.
This week brought some pleasing data in terms of ongoing strength in the economy and cooling inflation. The Advance Q4 GDP report showed that real GDP rose 3.3% versus an expected 2.0% and the GDP Price Deflator increased 1.5% versus an expected 2.8%.
Personal income increased 0.3% month-over-month in December, as expected, but personal spending increased a much stronger-than-expected 0.7% (Briefing.com consensus 0.4%). The inflation gauges were spot-on with expectations. The PCE Price Index was up 0.2% month-over-month and so was the core-PCE Price Index, which excludes food and energy.
With the December changes, the PCE Price Index was up 2.6% year-over-year, unchanged from November, and the core PCE Price Index was up 2.9% -- the lowest since March 2021 -- versus 3.2% in November.
Treasuries settled little changed from last Friday following the pleasing economic releases. The 10-yr note yield settled one basis point higher at 4.16% and the 2-yr note yield dropped five basis points this week to 4.36%. This price action followed Wednesday's $61 billion 5-yr note auction, which met poor demand, and Tuesday's strong $60 billion 2-yr note sale.
In other news, the People's Bank of China cut its required reserve ratio for commercial banks by a 50 basis points.
Nasdaq Composite: +0.9% for the week / +3.0% YTD
S&P 500: +1.1% for the week / +2.5% YTD
Dow Jones Industrial Average: +0.7% for the week / +1.1% YTD
S&P Midcap 400: +0.8% for the week / -0.6% YTD
Russell 2000: +1.8% for the week / -2.4% YTD