The Week In Review 9/5/2023
“Kill them with success and bury them with a smile.” – Usain Bolt
Good Morning ,
We hope your long Labor Day Weekend was pleasant!
Another outstanding week… with buyers around most of the week.
We started the week strong with plenty of interest in buying stocks and bonds, with handsome gains in the major indices. Softer price action at the end of the week was offset by sizable gains in the first half of the week. Including the Friday before last.
The major indices registered four consecutive winning sessions at Wednesday's close. Last week's upside moves had the S&P 500 reclaim 4,500, above its 50-day moving average.
Broad based gains reflected market participants' willingness to buy on weakness, aided by a big drop in interest rates. Overall, there just wasn't a lot of conviction on the part of sellers. Many of last week’s sessions featured below-average volume, which is not out of the ordinary for the last week of August ahead of Labor Day weekend.
Mega cap stocks again took the lead, benefitting from the drop in interest rates.
The 2-yr note yield fell 17 basis points this week to 4.88% and the 10-yr note yield fell seven to 4.17%. Those moves were in response to a batch of economic data that wasn't too bad but wasn't too good either.
Slightly weaker than expected economic reports were a good thing in the market's eyes as it relates to Fed policy. Market participants have been waiting for data to corroborate the notion that the Fed won't raise rates again.
The economic calendar last week featured the August Consumer Confidence Index, July JOLTS - Job Openings Report, the second estimate for Q2 GDP, July Personal Income and Spending, the August ISM Manufacturing Index, and the August Employment Situation Report. Goldilocks is still in the house…
A big move in oil prices was lurking under the radar this week. WTI crude oil futures jumped 2.3% on Friday, which brought this week's percentage gain to 7.8%, to $85.55/bbl. That move in oil prices provided strength in the S&P 500 energy sector, up 3.8% this week, but also raised eyebrows as it relates to inflation staying persistently high.
Aside from energy, the information technology (+4.4%), consumer discretionary (+3.0%), and communication services (+3.5%) sectors saw the largest gains. The countercyclical utilities (-1.7%) and consumer staples (-0.3%) sectors were the lone holdouts to close with a loss this week.
On the earnings front…
Dow component Salesforce was a standout winner following its quarterly results and guidance. Retailers Dollar General and Five Below sank after reporting quarterly results that featured below-consensus guidance, while Best Buy and lululemon athletica jumped after their earnings report.
Have a wonderful holiday shortened 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.
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