Hello, this is Josh Waynick, Investment Strategist at Fifth Third Bank
Major US equity indices were up this past week and gave investors the 6th week this year of positive returns in the S&P 500. Specifically, the S&P 500 rose 1.7%. The Nasdaq Composite gained 1.4% and the Dow Jones Industrial Average returned 1.3% over this past week. Looking at debt markets, the U.S. Treasury Yield Curve moved in a ‘net flattening’ shape with shorter yields rising and longer yields falling over this last week. Focusing the current 2-year/10-year inversion, the U.S. Treasury 10-year yield fell 3 basis points to 4.25% with the U.S. Treasury 2-year yield rose 5 basis points to 4.69%. As a result, the 2-year/10-year Inversion expanded 8 basis points during the week and ended the week at 44 basis points inverted. The dollar index, which measures the US Dollar against a basket of global currencies, moved lower during the week and ended the week down 0.3%. Gold rose by 1.1% over the week and ended the week at $2,035 per ounce. Oil fell for the week by 3.3% and remains well below the highs observed this past September. Specifically, at the end of Friday, West Texas Intermediate crude oil sat at $76.55 per barrel.
Looking back at equity markets, the weekly gains observed came largely due to the strong performance from this past Thursday, when the S&P 500 returned 2.1%, which was the best daily performance for the S&P 500 since August of 2022. The strong day came on the heels of a very robust earnings report from NVIDIA, a stock that continues to reward investors. As of this past Friday, NVIDIA has returned investors 59% compared to 6.9% for the S&P 500 so far in 2024.
Circling back to the Economy, this past week was fairly quiet. This past Thursday, S&P Global reported their most recent Purchasing Manager Indexes. Markets observed a slight increase in manufacturing PMIs with a slight drop in Service PMIs. Additionally, this past Wednesday the U.S. Central Bank released the minutes from their January meeting where market participants were reminded that the U.S. Central Bank continues to be concerned by: “… the risks of moving too quickly to ease the stance of policy.” These concerns from the central bank have pushed back market expectations of when the first-rate cut will occur. Currently, the market expects the first rate cut to occur in June.
The most recent earnings season continues to wrap up. As of this past Friday, with around 90% of the S&P 500 having reported, actual earnings have grown 6.8% compared to the prior year.
Shifting our lens to upcoming economic news, the week ahead will give investors a new data point on the inflation front. On February 29th PCE and Core PCE Inflation, the Fed’s preferred measure of inflation, will provide an update for market participants. Consensus expectations for both the headline PCE and Core PCE are for a slight ‘Leap’ down from last month’s data. Specifically, markets are expecting headline to fall to 2.4% with Core PCE to drop slightly to 2.8%, both above the Fed’s 2% target.
That concludes this week’s Economic Beat. As always, we will be watching and reporting back to you next week.
