By: Dave Chenet, CFA, CAIA
| Close | Weekly return | YTD return | |
| S&P 500 | 4,169.48 | 0.87% | 8.59% |
| Nasdaq Composite | 12,226.58 | 1.28% | 16.82% |
| Russell 2,000 | 1,768.99 | -1.27% | 0.54% |
| Crude Oil | 76.65 | -0.22% | -4.37% |
| US Treasury 10yr Yield | 3.45% |
Source: YCharts, Yahoo! Finance, WSJ
Market Recap
Strong earnings results from Meta, Microsoft and Alphabet pushed equity markets higher this week, with the tech-heavy NASDAQ leading gains. On the economic front, a drawdown in business inventories led to a weaker-than-expected estimate of US economic growth for the first quarter of the year. Partially offsetting the drawdown in inventory was a strong rise in consumer spending as purchases of motor vehicles and hospitality categories showed a still-tight labor market is encouraging spending. Included in the GDP data, PCE inflation increased from a 3.6% pace in the fourth quarter to a 3.8% pace at the end of the first quarter. Core PCE, which strips out food & energy, rose at a 4.9% pace. Both estimates were above the level that had been anticipated by economists and confirmed to markets that the Federal Reserve is likely to raise short-term interest rates by 0.25% at the conclusion of its meeting next week.
What We’re Reading:
Bloomberg: Americans Go Deeper Into Debt as They Use Buy Now, Pay Later Apps for Groceries
Reuters: Sluggish growth and high inflation leave ECB in tight spot
Reuters: Yuan overtakes dollar to become most-used currency in China’s cross-border transactions
Chart of the Week:
Source: Jefferies
Market breadth has deteriorated, with just 32% of stocks outperforming the overall index. In a similar fashion to 1999 & 2021, mega-cap tech names have led. A market rally with such low participation, however, suggests increased market fragility.
