Weekly Market Snapshot
Week of July 22, 2024
- Markets endured a choppy week, as record highs for some equity indices gave way amid trade concerns in the chip sector, and the disruption from a global IT-related outage.
- The events of the past week, namely the assassination attempt of Donald Trump, have forced markets to dust off their scenario templates.
- Indeed, the incident has translated into higher odds of a Trump victory across betting markets, which now average roughly 60% based on an aggregation done by RealClearPolitics. That’s up sharply from just under 50% as of early June. (Note: these figures were calculated prior to President Biden deciding not to run for re-election.)
Week of July 15, 2024
- Equity markets rose alongside Fed Chair Powell's testimony to Congress, and encouraging U.S. inflation data.
- The S&P 500 gained 0.9%, with rate sensitives leading, while telecom services and the Nasdaq lagged.
- Meantime, the TSX jumped 2.8%, with all sectors posting gains.
Week of July 8, 2024
- Equity markets rose modestly this week alongside some softer economic data and shortened holiday trading.
- The S&P 500 rose 2%, with tech and communication services leading. The index pushed above 5,500 for the first time and finished the week at a record high.
- Meantime, the TSX added 0.8%, with materials leading.
Week of July 1, 2024
- Markets successfully navigated the first half of 2024 despite uncertainty on a number of fronts. The broad macro environment is flashing sturdy but below-potential growth, lingering inflation pressure and central banks that are reluctant to pivot to full-scale easing.
- U.S. Technology and Communication Services stocks have maintained their momentum and are arguably the strongest asset class through mid-2024. These two sectors are each up nearly 30% in the S&P 500 after posting gains of more than 50% last year.
- Canadian equities haven’t been able to match the firepower of the S&P 500—they just don’t have exposure to what has been working. While there have been some trouble spots—a tough bank earnings season and a bear-market in telecom—the TSX has still managed to scramble to a 4% gain with help from Resources.
Week of June 24, 2024
- Equity markets were mixed this week alongside a quiet and mostly subdued run of economic data.
- The S&P 500 rose 0.6%, led by Consumer Discretionary and Energy, while Technology took a back seat for a change. The index is now up a hefty 25% in the past year amid disinflation and sturdy growth.
- Meantime, the TSX dipped 0.4%, with Technology, Utilities and banks weighing. While still solid, the 10% one-year gain in Canadian stocks continues to lag their U.S. peers.
Week of June 17, 2024
- Equity markets were mixed this week, as encouraging U.S. inflation data helped sentiment, but most of the strength was confined to Technology. The S&P 500 rose 1.6%, while the Nasdaq powered ahead by 3.2%. Indeed, Technology added 6.4% within the S&P 500 and, along with Communication Services and Consumer Discretionary, were the only sectors up on the week.
- Meantime, the TSX slipped 1.7% amid broad-based weakness outside of Technology. That included a 2.7% decline in banks, which saw National Bank announce a takeover of Canadian Western Bank at a large premium.
- Overseas, the uncertainty surrounding a snap election in France pulled that index down more than 6% on the week and into negative territory for all of 2024.
Week of June 10, 2024
- Equity markets churned out gains this week alongside firm U.S. economic data and rate cuts by the Bank of Canada and ECB.
- The S&P 500 rose 1.3%, led by technology and health care, although the Roaring Kitty hoopla sapped most of the attention. The index closed the week just off a record high, along with the Nasdaq, and is now up a cool 12.1% on the year.
- The TSX slipped 1.2% on the week, with energy and materials dragging against gains in consumer stocks, technology and telecom.
Week of June 3, 2024
- Equity markets dipped this week alongside some mixed earnings results and decent overall economic data flow.
- The S&P 500 dipped 0.5%, with Technology and Industrials down, while Energy and Utilities outperformed on the week.
- Meantime, the TSX gave back 0.2% with weakness in Industrials and Utilities, along with choppy post-earnings action among the major banks.
Week of May 27, 2024
- Equity markets were little changed this week, with the S&P 500 flat and the TSX dipping 0.6%.
- Stocks are holding near record highs in North America at a time when expectations of Fed easing are getting scaled back and longer-term Treasury yields are trending higher.
- Given that there’s not too much leeway in valuations—a discussion for another day—the market is relying more on the idea that earnings will remain solid.
Week of May 20, 2024
- Equity markets were mostly higher this week, as the closely-watched U.S. Consumer Price Index (CPI) report didn't seriously disappoint—it certainly wasn't great, but we've been conditioned to deal with bad inflation prints.
- The S&P 500 rose 1.5%, while the tech-heavy Nasdaq led with a 2.1% advance. The gains saw the S&P 500 reclaim record levels, while the Dow pushed above 40,000.
- Canadian stocks lagged, up 0.7% on the week as declines in Energy and Industrials offset gains in Materials and banks.
Week of May 13, 2024
- Equity markets posted a steady run of earnings-led gains this week that has left the S&P 500 within striking distance of the late-March high.
- The index rose 1.9% on the week, led by utilities, banks and materials, while all remaining sectors posted gains.
- The TSX added 1.6%, with strength in materials and energy outweighing weakness in health care and energy.
Week of May 6, 2024
- After closing off the month of April in the red, most equities rallied in the latter half of the week, helped by earnings reports (notably Apple), a less-hawkish-than-expected Fed, and some encouraging late-week data.
- The tech-heavy NASDAQ (+1.4% on the week) led gains among major indices, with the Dow (+1.1%) not far behind.
- On the other end, the TSX eked out a 0.1% loss. (Note many global markets were closed for at least one day this week, with China closed since Wednesday.)
Week of April 29, 2024
- The S&P 500 added 2.7% this week, with broad-based gains led by Technology, Consumer Discretionary and Banks. Energy underperformed but continues to be among the top sectors year-to-date.
- The S&P/TSX followed roughly the same pattern, but on a much more muted scale, finishing up just 0.7%. On a sector basis, Consumer Staples led the way, while Industrials lagged the pack.
- Equity performance around the globe largely mirrored the moves in North America. European bourses overcame a mid-week lull, with the major indices finishing broadly in the black, led by a solid 3.1% gain in the UK’s FTSE 100.
Week of April 22, 2024
- Equity markets continued their correction this week, with some firm economic data unable to counter the reality that rate cuts are not coming as soon or aggressively as previously thought.
- The S&P 500 fell 3.2% by late Friday, with Technology, Consumer Discretionary and Communication Services posting the deepest declines alongside some steep selloffs from the likes of Netflix.
- Meantime, the TSX gave back a more modest 0.7% as the sector mix was relatively favourable.
Week of April 15, 2024
- Equity markets struggled this week as a tough U.S. inflation print further dialed back rate-cut expectations.
- The S&P 500 fell 1.6%, with financials, health care and materials posting the deepest declines. A mixed bag of early bank earnings also weighed late in the week.
- Meantime, the TSX gave back 1.6%, as health care was trounced more than 12%, while higher-yielding names struggled.
Week of April 8, 2024
- Equity markets were mixed this week alongside a heavy dose of economic data and Federal Reserve commentary. The S&P 500 dipped 1.0%, with health care, consumer staples and banks posting the deepest declines, while energy and telecom outperformed.
- Indeed, it was a strong week for resource stocks with oil and gold prices now making big runs. WTI oil prices pushed above $86, now up more than 20% since the start of the year, while gold has rallied 13%.
- This is, of course, music to the ears of the TSX which outperformed this week, up 0.4%. Materials and energy posted strong gains of 5.4% and 3.3%, respectively.
Week of April 1, 2024
- Equity markets rose further this week, with solid growth data setting the backdrop.
- The S&P 500 gained 0.4% on a broad mix of strength across utilities, banks and health care, while the high-fliers—technology and telecom services—lagged.
- The TSX added 0.8% with strength in health care, materials and energy, and the latest rally has lifted the index a solid 5.8% year-to-date.
- Notably, each of the TSX, S&P 500 and Nasdaq were pushing record highs this week.
Week of March 25, 2024
- Equity market rose this week with a combination of sturdy economic data and no major hawkish surprises by the Federal Reserve.
- The S&P 500 rose 2.3%, led by banks and telecom services, while another hot IPO (Reddit) shot out of the gates.
- The TSX added 0.6%, touching a new record high at one point, led by Healthcare but held back by weakness in Consumer Staples and telecom.
Week of March 18, 2024
- Equity markets struggled this week, with firm U.S. inflation data further pushing out Fed easing expectations, and even the Bank of Japan is set to end an era of negative interest rate policy.
- The S&P 500 dipped 0.1%, with Consumer Discretionary and Health Care lagging.
- The TSX added 0.5%, as Energy and Materials posted solid gains.
Week of March 11, 2024
- Equity markets finished mixed this week as the economic data and central bank chatter continued to suggest that rate cuts are coming. Soon. Promise.
- The S&P 500 dipped 0.3%, with gains in banks and utilities offset by weakness in technology and consumer discretionary. The TSX outperformed, gaining 0.9% on the back of materials (i.e., gold) and strength in utilities and banks.
- Both the S&P 500 and TSX pushed new 52-week highs this week before dipping on Friday, and both are still running along above their 50- and 200-day moving averages.
Week of March 4, 2024
- Equity markets notched further gains this week amid a mixed run of growth and inflation data.
- The S&P 500 rose 0.9%, led by technology and consumer discretionary.
- The TSX added 0.7%, with energy getting a boost from a return to $80 oil. Bank earnings results were mixed, and the sector finished the week little changed when all was said and done.
Week of February 26, 2024
- Equities hit fresh record highs this week in a number of markets from Europe to Japan.
- In North America, the rally was fuelled by a stellar earnings report by Nvidia on Wednesday, which sparked broader exuberance on the benefits of AI. Consumer staples and technology led the way, though gains in the S&P 500 were broad-based among sectors.
- The feeling was a bit more muted on the TSX (despite better economic data; see below), which eked out only a 0.7% advance on the week. Note that tech companies fell, perhaps as investors were lured by flashier names south of the border; that said, the sector remains well above its 200-day moving average.
Week of February 19, 2024
- Equity markets were little changed this week, with tough inflation news keeping the market in check.
- The S&P 500 dipped 0.4% as gains in banks and energy were offset by weakness in technology and communication services. The index continues to hold above that closely-watched 5,000 level.
- Meantime, the TSX rose 1.2% on the back of broad strength in energy, financials, consumer staples and industrials—some solid earnings hits helped. While not pushing record highs like its U.S. counterpart, the Canadian index has moved to the highest level since early 2022, and is climbing the ascending 50- and 200-day moving averages again.
Week of February 12, 2024
- Equity markets were mixed this week with little in the way of major market-moving data.
- The S&P 500 rose 1.4% to a record high, topping the 5000 level for the first time on record. Solid economic data in recent weeks, ongoing expectations that we’re on the verge of an easing cycle, and rock-solid earnings results are all supporting the market.
- The TSX, however, was down 0.4% on the week and continues to lag its U.S. counterpart, now barely positive year-to-date (versus 5.4% for the S&P 500); and up just 2% over the past year (23% for the S&P 500).
Week of February 5, 2024
- Equity markets held firm this week amid a wide range of market-moving events.
- The Fed Open Market Committee (FOMC) left rates unchanged, as expected, but quashed some expectations of very near-term rate cuts; another flare-up of regional bank concerns reverberated through some pockets of the market; U.S. economic data were rock solid; and, for good measure, some large tech names like Meta posted strong earnings and announced some cash will be returned to shareholders—even tech investors love themselves some dividends.
- All in, the S&P 500 rose 1.4%, with consumer stocks leading the way, while the TSX dipped 0.2% on weakness in telecom and energy.
Week of January 29, 2024
- Markets continued their strong start to the year with inflation and growth both cooperating.
- The S&P 500 rose 1.1% as energy and telecom services rallied more than 4%, while consumer discretionary lagged. The index pushed further into record territory at one point, leaving it up more than 30% from the October 2022 low, a level that was set amid widespread expectation for a U.S. recession. The TSX added 1% on the week.
- With the advance Q4 growth numbers now in hand, the U.S. economy finished 2023 by reeling off a sixth consecutive quarter of growth at 2% or better, almost laughing off recession calls and over 500 bps of Fed tightening. While Q4’s upside surprise of 3.3% annualized rate was largely because of trade and inventories, final domestic demand continued to run at a solid 2.7% clip and is now up 3% in the past year.
Week of January 22, 2024
- Equity markets were mixed this week, but U.S. stocks powered higher with the S&P 500 closing at a record high. The index rose 1.2% on the week, led by a strong 4.3% rally in technology, while energy, materials and utilities lagged. The Nasdaq added 2.3% on the week and now almost 20% in the last three months alone.
- Meantime, the TSX dipped 0.4% and continues to lag over the past three months.
- As usual, it's a story of little exposure to what's working (tech), and a lot of exposure to what's not (energy and materials).
Week of January 15, 2024
- Equity markets pushed higher this week as investors continue to zero in on 2024 rates hikes, and despite sticky U.S. inflation results.
- The S&P 500 gained 1.8%, and is within close striking distance of an all-time high. The Dow continues to bounce around near record levels, while the Nasdaq still has about 7% to climb. The TSX also has some more work to get there, and underperformed with a 0.3% advance this week.
- Technology, communication services and consumer discretionary led North American markets on the week, which naturally leads to the Canadian market lagging.
Week of January 8, 2024
- Equity markets struggled this week after expectations of early-2024 rate cuts met the reality that those cuts are likely still some time off.
- The S&P 500 fell 1.5% on the week, with weakness in technology and consumer discretionary offsetting gains in health care and utilities.
- Meantime, the TSX gave back just 0.1%, with solid gains in telecom and energy lending support, while technology and consumer stocks fell.
Week of December 18, 2023
- Equity markets rallied this week as markets priced in early-and-often rate cuts for 2024.
- The S&P 500 rose 2.5%, led by banks and cyclicals (materials, industrials and consumer discretionary), while the Dow pushed to a record high.
- The TSX gained 1.0% with banks jumping almost 4% on the week.
Week of December 11, 2023
- Equity markets were mixed this week alongside sturdy U.S. labour market data, and a bond market that continues to price in rate cuts next year.
- The S&P 500 inched up 0.2%, with banks and telecom services leading the pack.
- The TSX dipped 0.6% as weakness in energy and materials weighed on the index.
Week of December 4, 2023
- Equity markets posted modest gains this week, alongside more encouraging U.S. inflation data and amid a wave of Canadian bank earnings.
- The S&P 500 gained 0.8%, with banks jumping more than 4%. The TSX rose 1.7%, led by materials and health care.
- The banks had a fine week overall, up 1.9%, as the sector rolled out a wide range of Q4 earnings hits and missed, which included a handful of dividend increases.
Week of November 27, 2023
- While not all global equity markets ended the week on a positive note, most of the majors posted relatively solid gains as some softer economic data bolstered hopes that rate relief could be just around the corner.
- While U.S. Thanksgiving likely kept trading a little thinner than usual, the moderate helping of weaker U.S. data offered an early read on the start of Q4. Notably, existing home sales slipped to the lowest level since 2010 in October, while durable goods orders fell to a four-month low.
- For its part, the Fed has acknowledged the economy’s headwinds, noting that it is “proceeding carefully” and that its members would continue to closely monitor all incoming data in the coming months.
Week of November 20, 2023
- Equity markets rallied this week alongside another move down in bond yields.
- The S&P 500 rose 2.2%, led by banks, materials and consumer discretionary, but all sectors posted gains.
- Meantime, the TSX gained 2.7% as rate sensitives sprung back to life, and technology jumped almost 7%.
Week of November 13, 2023
- Equity markets were mixed this week amid a thin run of economic data, while comments from both the Fed and Bank of Canada signalled we have a long way to go still before we get any rate relief.
- The S&P 500 added 1.1%, with technology and telecom services leading the pack.
- Meanwhile, the TSX slipped 1.0% as health care, materials and energy fell.
Week of November 6, 2023
- Equity markets rallied this week alongside a sharp retreat in bond yields. The S&P 500 rose 5.9%, led by banks and consumer discretionary.
- The Federal Reserve left interest rates unchanged, as widely expected, and market expectations that they are done tightening continued to firm.
- Meantime, the October payrolls report landed just right, with a 150k increase in jobs, a one-tick move up in the jobless rate (a little more slack helps at this stage), and cooler wage growth. In an instant, the punishing selloff in the Treasury market has turned, at least for now, with 10-year yields down almost 50 bps from when they touched 5% in mid-October.
Week of October 30, 2023
- Equity markets were down again this week amid steady Treasury yields, some mixed earnings reports and resilient economic data.
- The S&P 500 fell 2.5%, with telecom services lagging down more than 6%, while energy, banks and health care also fell sharply. Utilities were the lone sector to scratch out a positive performance on the week, but they are the worst performer this year. Meantime, the TSX was down 2.0% on the week, with technology and health care lagging, while utilities and telecom held firm.
- Both the S&P 500 and TSX have now slumped below their 200-day moving averages.
Week of October 23, 2023
- Equity markets struggled this week alongside the relentless selloff in Treasuries. The S&P 500 fell 2.4%, with weakness in consumer discretionary, banks and technology weighing heaviest.
- The index is again flirting with the 200-day moving average as it drifts down from above.
- Meantime, the TSX was down 1.8% on the week, with gains in materials and energy lending some support as WTI pushed back above $90 at one point.
Week of October 16, 2023
- Equity markets were mixed this week as Treasury yields took a break from their relentless push higher.
- The S&P 500 gained 0.4% on the back of utilities and energy, while consumer discretionary lagged.
- The TSX added 1.1%, with a 5% jump in energy leading the advance.
Week of October 9, 2023
- Equity markets were mixed this week alongside still-rising yields and a rock-solid U.S. payrolls report.
- The S&P 500 added 0.5% with gains in communication services and technology offset by deeper declines in energy, utilities and consumer staples. Ten-year Treasury yields pushed to 4.8% to end the week, the highest since 2007, with the weekly selloff capped by a juicy 336k increase in U.S. payrolls in September.
- The TSX was down 1.5% on the week, and continues to struggle more under the weight of higher yields.
Week of October 2, 2023
- Equity markets struggled this week as bond yields continued to push higher and test valuations.
- The S&P 500 fell 0.7%, with utilities down sharply, while consumer stocks and financials also struggled. Ten-year Treasury yields continued to rise on the week, as did most of the yield curve, before backing off somewhat on Friday. That despite some sluggish data and a well-behaved 'supercore' inflation print, which rose just 1.7% annualized in August, or 3.4% over the latest three months.
- Meantime, the TSX fell 1.2% as rate-sensitives and higher-yielding sectors struggled alongside new highs for GoC yields—as one example, the closely-watched 5-year yield pushed to 16-year highs.
Week of September 25, 2023
- Equity markets slumped this week as the ongoing reality of higher-for-longer interest rates set in deeper.
- The S&P 500 fell 2.9%, with all sectors in the red. Consumer discretionary posted the deepest decline, down more than 6%, while banks and technology were also weak.
- Meantime, the TSX slid 4.1% as higher-beta sectors (see technology and health care) were down sharply, while rate-sensitives also struggled.
Week of September 18, 2023
- Equity markets gave up solid gains late this week alongside a decent run of economic data, but another move higher in oil prices.
- The S&P 500 dipped 0.2%, led by banks and utilities, while industrials and technology lagged.
- The TSX, however, churned out a solid 2.7% gain as materials, banks, industrials and utilities all posted gains above 3%.
Week of September 11, 2023
- It was a challenging week for global stocks, though the major indices in North America and Europe appeared to get some footing on Friday. Continued strength in oil prices has been one driver of the recent weakness, as it has fanned inflation concerns at a time when many major central banks hoped to be at or near the end of their rate-hiking campaigns. Notably, oil prices vaulted to their highest levels of the year, rising above the $87 mark following coordinated moves, announced on Tuesday, that will see Saudi Arabia and Russia extend current voluntary production cuts (1mb/d and 300kb/d, respectively) through year-end.
- The S&P/TSX ended the week 2.3% below last Friday’s close, marking its fifth down week of the last six. On a sectoral basis, materials, telecom and technology led to the downside, while health care, energy and consumer stables saw more moderate losses.
- The S&P 500 was a little higher up the equity market leaderboard, falling 1.3% this week. While the losses were fairly broad-based (outside of energy and utilities), technology was a notable underperformer, weighed by the Chinese government’s new restrictions on foreign-branded electronic devices (i.e., iPhones).
Week of September 4, 2023
- Equity markets enjoyed a winning week to turn the page to a new month. Supporting the broad-based gains were data pointing to a softer labour force and therefore, more reason for the Fed to stand pat.
- The S&P/TSX led the weekly gains, supported by an 11% pop in tech stocks, bringing that sector’s year-to-date bounce up over 50%.
- A more modest 4% rise in tech and energy also powered the S&P 500 to a 2.5% rise on the week, while consumer staples and utilities lost some ground in that index.
Week of August 28, 2023
- In this last full week of August, stocks struggled to find direction, posting solid gains one day only to be wiped out the next day. By the time all was said and done, the S&P 500 eked out a 0.8% gain, marking the first increase in the past four weeks, while the Dow slipped 0.4%.
- The Nasdaq jumped 2.3%. Despite the solid gains, the tech-heavy gauge failed to gain traction following more blow-out results from Nvidia.
- Meantime, the TSX added 0.1% on the week.
Week of August 21, 2023
- Equity markets slumped this week amid concern about China's economy and another move higher in bond yields. The S&P 500 fell 2.1%, with all sectors in the red. Banks lagged, down 5%, while consumer stocks were only slightly better.
- Earnings results on the latter were mixed, with Walmart raising its outlook, although hinting at some pressure on discretionary spending, while Target chopped its guidance.
- Meantime, the TSX was down 2.9% on the week, with materials, banks and telecom all struggling.
Week of August 14, 2023
- Equity markets were mixed this week alongside more evidence that inflation is coming further down the mountain. The S&P 500 slipped 0.3%, with technology and banks trailing as energy and health care led the pack. The index has faded in recent weeks, but is just running into the 50-day moving average and remains well above the 200-day mark.
- While the year-to-date 16% gain is still very top heavy—technology and communication services are each up more than 35%—the gains have broadened out recently.
- Over the latest three months, five of the ten major sectors have posted gains of 10% or more, and just two (consumer staples and utilities) are stuck modestly in the red. In market speak, this looks action that has moved toward pricing in a soft landing.
Week of August 7, 2023
- Equity markets slumped this week alongside a sharp selloff in the bond market through Thursday, and some mixed economic data.
- The S&P 500 was down 2.3%, with weakness in rate-sensitives and technology, while all other sectors but energy were in the red.
- Meantime, the TSX was down 1.4%, with all but energy also posting declines
Week of July 31, 2023
- Equity markets rallied this week on signs that the economy is holding firm despite ongoing rate hikes, while inflation continues to ebb. The S&P 500 gained 1.0%, with telecom services charging ahead almost 7%. Defensives and rate-sensitives lagged the pack.
- While the Fed raised rates as expected, the Bank of Japan's tweak to yield curve control lifted bond yields, while the European Central Bank also raised rates.
- The Nikkei and major European/U.K. indices were all higher on the week. The TSX, however, lagged with a 0.1% decline, as telecom, consumer staples and utilities were all lower.
Week of July 24, 2023
- Equity markets were mixed this week, patiently waiting for the results of next week's FOMC meeting.
- The S&P 500 rose 0.7%, while the TSX added 1.4%. The Q2 earnings season is underway, and it comes amid a still-tricky environment for profit growth and market expectations.
- This week highlighted as much, with a number of banks topping estimates and suggesting higher rates are helping net interest margins; some big names like Tesla and Netflix reported good results but were sold by investors; some disappointing numbers in the chip sector weighed on tech; and for every consumer business touting sturdy demand, there was seemingly one (e.g., Best Buy) eying ‘recessionary behaviours.’
Week of July 17, 2023
- Equities rallied this week amid generally strong earnings reports and a softer-than-expected U.S. inflation print that suggested we might be nearing the end of the road for Fed tightening.
- The gains extended beyond Wall Street, though—the TSX closed the week 2.2% higher, and even the CSI 300 was up almost 2% on the week.
- Annual growth in U.S. CPI slowed to 3.0% in June, a full percentage point below the previous month’s pace.
Week of July 10, 2023
- Equity markets struggled this week as a solid run of economic data stoked the higher-for-longer interest rate narrative. After going back and forth, and back again, pricing in rate cuts later this year, markets now seem to be finally throwing in the towel that this cycle is going to take longer to play out.
- The S&P 500 slipped 1.2%, with materials and health care lagging, while banks held firm. The index has still broken strongly out of the trading range that was in place for most of the past year, and is eying the all-time high set in January 2022 (less than 10% to go).
- Meantime, the TSX fell 1.6%, with widespread declines across technology, materials, energy and banks. Canadian stocks are now falling well behind their U.S. counterparts on the year, up just 2.3% versus 14.6% south of the border.
Week of July 3, 2023
- Half of 2023 is now in the bag and financial markets have had plenty to chew on.
- The broad macroeconomic backdrop shows an economy holding on relatively well despite widespread concern about recession—many buffers in place for the economy are proving their worth.
- The flip side is that inflation remains stubborn, leaving both the Bank of Canada and Federal Reserve to grapple with short-term core metrics that are still well above their comfort range.
Week of June 26, 2023
- Equity markets pulled back this week amid a quiet run of economic data.
- The S&P 500 slipped 1.4%, with banks (-4.1%) and energy (-3.4%) posting the deepest declines, while defensive sectors held at the top of the leaderboard.
- While the data flow was light, Fed Chair Powell testified to Congress, reiterating that the rate hold at the last meeting wasn’t necessarily a pause (more like a skip that reduces the tightening size); and reinforcing that they could be leaning against inflation with these elevated interest rate levels for a while still.
Week of June 19, 2023
- Equity markets rallied this week, with the AI-powered tech and communication services names still driving the gains. The S&P 500 rose 2.6%, with technology leading the pack up 4.4%. Not to name names, but the blowup in valuations for a select group of companies has now powered technology 41% higher this year, while communication services are not far behind, up 36%.
- Meantime, the TSX continues to lag, up 0.4% on the week as gains in consumer discretionary and technology were partly offset by declines in utilities and energy.
- It’s no secret that the Canadian index has been stuck in a range all year (+3% so far in 2023) even as the S&P 500 has broken out above last summer’s high (+14.8% in 2023). From a simple valuation perspective, at around 13x forward earnings versus 19x-plus in the U.S., Canada has rarely looked this cheap on a relative basis.
Week of June 12, 2023
- Equity markets held firm this week, with little in the way of major market-moving data.
- The S&P 500 gained 0.4%, led by consumer discretionary stocks, while technology dipped.
- Meantime, the TSX slipped 0.7% as health care, consumer staples and industrials lagged.
Week of June 5, 2023
- Equity markets rose this week, alongside a debt ceiling deal and mixed run of economic data. The S&P 500 added 1.8%, with all sectors posting gains. Congress passed the Fiscal Responsibility Act, which will suspend the U.S. debt ceiling until January 2025 along with some discretionary spending cuts.
- While the acute near-term risk of a bad credit outcome relating to the debt ceiling is now dealt with, the much more chronic problem of the United States' fiscal situation is going to persist.
- Meantime, U.S. payrolls surged by a stronger-than-expected 339k in May, but the details were weaker than the big headline. The jobless rate rose three ticks to 3.7%; hours worked dipped; and wage growth cooled to 4.3% y/y, although the 3-month annualized trend is still firm at 4.0%. Elsewhere, jobs openings rebounded to 10.1 million in April, but consumer confidence fell (May) and manufacturing remains in contraction, as measured by 46.9 on the ISM.
Week of May 29, 2023
- Equity markets were mixed this week, with some big moves in the tech sector helping the broad U.S. indices, but an unresolved debt limit standoff still weighing on sentiment.
- The S&P 500 added 0.3%, powered by a 5% surge in tech, while the TSX gave back 2.1% as banks lagged.
- Nvidia’s AI-fueled surge caught attention this week, but a handful of big tech and communication services names have been doing almost all the work in propping up equities this year.
Week of May 22, 2023
- Equity markets rose this week alongside a bounce in U.S. regional banks, and an early-week vote of confidence from President Biden that a deal will get done on the debt ceiling.
- On the latter, we’ll breathe easier when we actually see it, and negotiations were reportedly struggling as of Friday.
- The S&P 500 rose 1.6%, led by banks and technology. The TSX, however, dipped 0.3% as materials weighed.
Week of May 15, 2023
- The S&P 500 is up a solid 7% this year, despite concerns about the economy, debt ceiling, and ongoing stress in the bank sector.
- That is impressive resilience given all of the challenges thrown at the market.
- There are a number of reasons why stocks and risk assets more broadly have held in from a macro perspective.
Week of May 8, 2023
- Equity markets endured the FOMC announcement, some key economic data, debt ceiling concerns and ongoing trouble in the U.S. regional bank sector—just another week in the office. The S&P 500 ultimately finished down a modest 0.8%, but not without some meaningful swings. Banks were hit hard, down 4.6% on the week, with some regional names under intense pressure. Defensive sectors—see health care and utilities—held at the top of the pack along with technology.
- It’s also noteworthy that the rangebound S&P 500 has mainly been propped up by the large heavyweights, many of which are in tech or communications services, and have seen valuations benefit from the prospect of a Fed pause.
- In fact, the S&P 100 large cap sector is up 2.6% over the past three months, masking an 11% slide in the smaller and broader Russell 2000. Meantime, the TSX gave back 0.5% on the week, with weakness in energy and health care weighing.
Week of May 1, 2023
- U.S. equities ended April with nice gains as a number of big-tech names reported better-than-expected earnings.
- That lifted sentiment despite slowing economic growth and high inflation.
- The Dow and the S&P 500 gained 0.9% this week, while the Nasdaq was the big winner, jumping 1.3%. Meantime, the TSX finished 0.3% lower.
Week of April 24, 2023
- Equity markets were mixed this week, and all eyes are on the Q1 earnings season with notable hits (big banks) and misses (Tesla) already on the books.
- Based on the latest tally from Refinitiv, S&P 500 earnings are expected to fall 5% y/y in the quarter, marking a second consecutive quarter below year-ago levels. Results so far have been decent, with just under 70% of companies topping analyst expectations—the bar has been lowered since the start of the year.
- At the sector level, solid gains in consumer discretionary, energy and industrials compared to a year ago can’t quite offset declines in technology, communication services and health care.
Week of April 17, 2023
- Equity markets rose this week, helped by softer headline inflation and solid bank earnings.
- The S&P 500 rose 0.8%, with banks jumping almost 6% as some bigger-cap names in the sector topped earnings expectations. Industrials and energy were also strong, while utilities and tech lagged.
- The TSX added 1.9%, with higher oil prices driving a 2.8% advance in energy.
Week of April 10, 2023
- The S&P/TSX Index added 0.6%. Resource sectors lifted the broad index, with Energy and Materials among the largest gainers. The marijuana-centric Health Care sector was the worst performer as appetite for risky, non-profitable stocks cooled.
- The S&P 500 Index was down 0.1%. A sharp decline in job openings renewed fears of a recession. Weakness from semiconductor stocks weighed on the Technology sector’s returns, while the defensive Utilities and Health Care sectors were among the top performers.
- Europe’s STOXX 600 Index gained 0.9%, Japan’s Nikkei 225 Index lost 1.9% while China’s CSI 300 Index was up 1.1%.
Week of April 3, 2023
- Equity markets pushed higher again this week, finishing Q1 on a strong note.
- The S&P 500 rose a snappy 3.5% on the week and, despite plenty of drama, closed the first quarter with a strong 7% advance. Meantime, the TSX added 3.1% on the week, which has allowed it to churn out a 3.7% gain in the quarter.
- Oh, and the Nasdaq? Just a cool 16.8% rally in the first three months of the year, the best such run since January 2021.
Week of March 27, 2023
- Equity markets were choppy again this week, walking a tightrope of ongoing troubles in the bank sector, and a less hawkish Fed. The S&P 500 finished up 1.4%, as gains across most sectors were dampened by weakness in banks and utilities.
- During the trials and tribulations of the past month, what has help up best? Communication services, technology and large caps. That is, areas of the market with valuations typically driven by interest rates (more on that below).
- Meantime, the TSX added 0.6%, with banks, industrials and utilities weighing heavier.
Week of March 20, 2023
- Equity markets endured a volatile week amid ongoing trouble in the bank sector.
- The S&P 500 finished up 1.4%, as sharp rallies in technology and telecom services outweighed another slide in financials.
- Lower bond yields fueled higher-beta stocks despite trouble elsewhere. The TSX, however, was down 2% as banks and energy weighed heavier.
Week of March 13, 2023
- Equity markets slid this week as trouble in the banking sector pushed the Fed, Bank of Canada and economic data to the background.
- The S&P 500 fell 4.5%, with all sectors in the red.
- The banks were thumped 11.5%, with some even larger spills in the smaller regional bank group.
Week of March 6, 2023
- Equity markets rebounded this week amid relative calm on the economic data and monetary policy fronts.
- The S&P 500 rose 1.9%, led by a mix of materials, communication services and industrials, while defensive sectors like consumer staples, utilities and health care lagged.
- The data flow was largely a wash this week, with durable goods orders and pending home sales posting solid gains in January, the services ISM holding well in expansion territory, but the manufacturing ISM showing continued weakness and auto sales slipping in February.
Week of February 27, 2023
- Stocks continue to struggle with the prospect of higher-for-longer interest rates. The S&P 500 fell 2.7% this week, and is suddenly down 5% from the February high.
- All sectors but energy were in the red, with consumer discretionary and telecom lagging the pack.
- Meantime, the TSX gave back 1.4%, holding up better thanks to a similar gain in the higher-weighted energy sector.
Week of February 20, 2023
- Equity markets pulled back this week, alongside sticky inflation and a shift in expectations toward more Fed rate hikes.
- The S&P 500 fell 0.3%, with energy deep in the red.
- The TSX dipped 0.5% despite a surge in health care.
Week of February 13, 2023
- Equity markets pulled back this week, with light data flow and a wave of Fed speakers arguing for elevated rates through the year.
- The S&P 500 gave back 1.1%, with all sectors but energy in the red.
- The TSX was down 0.7%, with health care down sharply, offsetting gains in energy and consumer staples.
Week of February 6, 2023
- The Federal Reserve raised rates by 25 bps this week, as expected; it reiterated that “ongoing increases in the target range will be appropriate”; and Chair Powell tried to talk up further rate hikes and labour-market tightness in his press conference. But the market wasn’t buying it (or rather, selling it), as risk assets and Treasuries both rallied strongly.
- The S&P 500 rose 1.6% on the week, and the Nasdaq rallied 3.3% with high-beta names in technology and communication services leading the charge. The TSX lagged in this charged environment, gaining just 0.2% as energy and defensives slumped. Ten-year Treasury yields fell just over 10 bps before the Friday payrolls report and even Bitcoin lurched higher post-Fed.
- Put it this way: If the Fed is concerned about easing financial conditions while their inflation fight is still underway, they took a step back this week.
Week of January 30, 2023
- Equity markets rallied this week on hopes of a soft landing for the economy.
- The S&P 500 rose 2.5%, with consumer discretionary, banks and technology leading the pack. Defensives (i.e., staples and health care) lagged, consistent with the broader market move back into riskier assets in recent weeks. On the year, the S&P 500 has now calmly added 6%, while the Nasdaq has popped 11%.
- Meantime, the TSX gained 1.0% as technology, health care and financials were all firmly higher. Rate-sensitive sectors (see REITs especially) have shot out of the gate with a 10% gain so far this year, and this week’s 25 bp hike-and-pause by the BoC helped the cause.
Week of January 23, 2023
- Equity markets struggled this week, as a soft run of economic data stoked slowdown concerns, while the U.S. ran into the debt ceiling, setting up possibly months of headlines and negotiation while extraordinary funding measures are used.
- The S&P 500 finished down 0.7%, with industrials, utilities and consumer staples lagging.
- The TSX added 0.7%, outperforming on the back of higher energy and technology sectors, and much better results across the rest of the spectrum.
Week of January 16, 2023
- Equity markets have rallied out of the gate in 2023, offering some hope that the dark days of 2022 are behind us from an asset price perspective.
- Recall that last year was historically bad for investors of most risk profiles. The S&P 500 fell more than 19%; 10-year Treasury total returns were -16.4%; and the combined 60/40 portfolio return of those two assets was the worst on a total return basis since at least 1970.
- We’ve simply never seen a year with both sides of the market down in sync like that, let alone punished so significantly.