Market Summary – February 12, 2024

Last Week’s Summary

  • S&P 500 Index rose 1.40%
  • International Equities rose 0.27%
  • Emerging Markets rose 0.76%
  • U.S. 10-Year Treasury Yield rose to 4.17%
  • Initial Jobless Claims fell to 218k
  • MBA Mortgage Applications 3.7%
  • S&P Global US Services PMI fell to 52.5
  • ISM Services Index rose to 53.4

What to Watch for This Week

  • M, 2/12/24 Monthly Budget Statement
  • T, 2/13/24 CPI, CPI Core
  • W, 2/14/24 MBA Mortgage Applications
  • Th, 2/15/24 Initial Jobless Claims, Empire Manufacturing
  • F, 2/16/24 PPI, PPI Core, U. of Mich. Sentiment, U. of Mich 1-Yr. Inflation

Weekly Market Recap

Wall Street celebrated a significant milestone as the S&P 500 surged past the 5,000 mark, driven by a resurgence in big tech and optimism surrounding potential rate cuts by the Federal Reserve, further bolstering the outlook for corporate earnings.

Since hitting its pandemic-induced low in March 2020, the U.S. Benchmark Index has more than doubled, fueled by optimism for a smooth economic recovery and the enthusiasm surrounding advancements in artificial intelligence. Friday’s rally was fueled by the technology sector, with the Nasdaq 100 climbing 1%. Investors found reassurance as a government report, confirmed progress in controlling inflation by the end of 2023, just days before the release of the key consumer price index.

Initially, Treasuries experienced a brief rise in response to the data, only to quickly reverse course. The two-year yield returned to levels seen prior to the Fed’s December “pivot“. Federal Reserve Bank of Atlanta President, Raphael Bostic, reiterated his commitment to achieving the inflation target, while his counterpart from Dallas, Lorie Logan, expressed a lack of urgency in cutting rates.

Meanwhile, the outlook for corporate earnings continues to underpin the market’s strength as earnings season progresses. Approximately 80% of S&P 500 companies reporting results have surpassed expectations during this earnings cycle, significantly exceeding the 10-Year average. Analysts are responding to this trend by revising their projections upwards.

Current estimates suggest Fourth-Quarter Earnings for S&P 500 members are expected to grow by 6.5% from the previous year on average, marking the strongest performance since mid-2022 and a notable improvement from the modest projection of 1.2% made in early January.

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