The Week In Review 6/12/2023

“Success consists of going from failure to failure without loss of enthusiasm” ~ Winston Churchill

Good Morning ,

We had another very nice week in the markets!

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 we couldn't hold that position on a closing basis, ultimately settling just a bit 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. 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, 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.

Apple, meanwhile, closed flat this week after introducing its Vision Pro mixed reality headset at its Worldwide Developers Conference on Monday.

Investors seem hopeful the economy can 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 move was partially fueled by Goldman Sachs lowering its probability of a recession in the next 12 months to 25% from 35%, and 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%.

Market Snapshot…

• Oil Prices – Oil prices fell more than a dollar a barrel on Friday to record a second straight weekly decline. U.S. West Texas Intermediate (WTI) crude futures fell $1.12, or 1.6%, to $70.17 a barrel. Brent crude fell $1.17, or 1.5%, to settle at $74.79 a barrel.


• Gold– Gold eased on Friday on a stronger dollar and higher yields, but was set for its best week since early May. Spot Gold fell 0.3% to $1,961.39 per ounce but is headed for a 0.7% weekly climb. U.S. Gold Futures fell 0.1% to $1,976.10. Silver closed out the week at $24.41.


• U.S. Dollar– The U.S. dollar bounced off two-week lows on Friday. The dollar index, which measures the currency against six major peers, rose 0.2% to 103.56. The Euro/US$ exchange rates is now 1.077.


• U.S. Treasury Rates– The yield on the 10-year Treasury was up by more than 3 basis points to 3.747%.


• Asian shares were mixed in overnight trading.


• European markets are trading higher.


• Domestic markets are trading higher this morning.

We have a big week of economic news…

Tuesday will feature May’s CPI report. Wednesday will be a double feature, PPI in the morning and FOMC announcement in the afternoon. To conclude the week, we will get May’s Retail Sales report on Thursday and the University of Michigan’s Consumer Sentiment and Expectations report on Friday.

Have a wonderful week!

The opinions expressed herein are those of Michael Hilger and not necessarily those of Raymond James & Associates, Inc., and are subject to change without notice. The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and you may incur a profit or loss regardless of strategy selected.
The information contained herein is general in nature and does not constitute legal or tax advice. Inclusion of these indexes is for illustrative purposes only. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. The Dow Jones Industrial Average (INDU) is the most widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials. The Dow Jones Transportation Average (DJTA, also called the "Dow Jones Transports") is a U.S. stock market index from the Dow Jones Indices of the transportation sector, and is the most widely recognized gauge of the American transportation sector. Standard & Poor's 500 (SPX) is a basket of 500 stocks that are considered to be widely held. The S&P 500 index is weighted by market value, and its performance is thought to be representative of the stock market as a whole. The NASDAQ Composite Index (COMP.Q) is an index that indicates price movements of securities in the over-the-counter market. It includes all domestic common stocks in the NASDAQ System (approximately 5,000 stocks) and is weighted according to the market value of each listed issue. The Russell 2000 index is an unmanaged index of small cap securities which generally involve greater risks
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