US Stocks Post Best Week Since November 2020

US Stocks

All three major indices gained big gains this week, each rising higher than 6%. Both the S&P 500 and Nasdaq Composite broke a seven-week losing streak, while the Dow Jones Industrial Average broke an eight-week losing streak. 

The US Stock market closed higher on Monday after two months of massive panic selling. President Biden’s statement of considering removing some import duties on Chinese goods also lifted investors’ sentiment. The blue-chip index (DJI) recorded its largest daily percentage gain since May 4.

Some indices fell while some gained on Tuesday as fears from Snap's bleak warning spread to other tech names. The 10-year Treasury yield made a sudden move lower as investors fearing a recession crowded into bonds sending their prices higher. The 10-year Treasury yield slipped as low as about 2.73%.

On Wednesday, all major indices gained after the minutes of the Federal Reserve’s May policy meeting showed the central bank is prepared to raise rates further than the market had anticipated.

The Dow rose for the fifth trading day in a row on Thursday. However, the tech-focused index was the outperformer, after trailing the other averages earlier in the day. The market seems to have regained its footing as investors hope to see a peak in inflation and seek value at these levels.

Wall Street closed sharply higher on Friday as signs of peaking inflation and consumer resiliency sent investors into the long holiday weekend with growing optimism. Dow was up 1.76%, S&P gained 2.47% and Nasdaq increased by 3.33%.

Key highlights of the week:

Quarter results: First-quarter earnings season is almost over, with 488 of the companies in the S&P 500 having reported. Of those, 77% have beaten consensus expectations. Macy’s shares increased 19.3% after the company raised its 2022 profit outlook. Williams-Sonoma rose 13% after beating estimates on the top and bottom lines. Nvidia reported weaker-than-expected guidance for the second quarter and a warning of a slowdown in hiring.

Signs of softening in economic data: The US Commerce Department reported that nondefense capital goods orders, excluding aircraft, increased 0.3% sequentially in April - a slowdown from the 1.1% recorded in March and a possible indication that business investment may be moderating. The April data from the Census Bureau showed that core durable goods orders, which exclude transportation, likewise grew 0.3%.  

10-year US Treasury: The benchmark 10-year US Treasury yield traded lower as the market appeared to focus on signs of slowing growth in the economy that could lead to a slower pace of Federal Reserve rate hikes. The yield of the 10-year U.S. Treasury bond fell to 2.79%, down from 3.13% just a couple of weeks earlier. Still, that’s a long way up from the 1.51% yield at the close of 2021.