Stock Market This Week (US): Nasdaq rose amid easing banking sector worries

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US Weekly

Stock Market This Week (US)

It was one of the best weeks for the US equity market. All three major indices ended over 3% higher. Let us look at how the week shaped up and the key highlights of the week.

US stock market this week: Stocks movement this week

The US equity market gained on Monday as investors attempted to move on from the crises that broke in the regional bank sector last week or so. Regional banks rose sharply as a series of events helped build positive sentiment in the sector. Technology shares fell as an increase in interest rates dampened hopes of a better outlook for growth stocks.

On Tuesday, all the major indices ended lower as an uptick in rates put pressure on the stocks - especially tech stocks. Bond yields jumped, with the rate on the 2-year US Treasury note climbing back above 4%, putting pressure on stocks and tech names in particular. Bank stocks slipped following a contentious hearing at the Senate Banking Committee. 

Stocks increased broadly on Wednesday - strong gains in tech helped the Nasdaq rebound after a losing session. Meta, Apple, and Netflix added more than 2% in the day. Regional banks rose and advanced by about 1%. The benchmark 10-year Treasury yield inched up to 3.57% as of the market close, and the short-term 2-year rate climbed to 4.09%.

On Thursday, the market rose for the second consecutive day as investors bet the worst of the regional bank crises has passed. Chip stocks such as AMD were among the market’s best performers. Weekly jobless claims increased by 7,000 to 198,000, adding to hopes that the Fed could slow down its tightening campaign because the labor market is cooling.

The US equity market increased on Friday for a third consecutive day. All the major indices ended over one and a half percent higher. The market got a boost after the Fed's preferred inflation gauge showed a cooler-than-expected increase in prices. The core Personal Consumption Expenditures index, which excludes energy and food costs, rose 0.3% in February, less than the 0.4% expected by polls.

Key highlights of the week:

Tech sector gained: Technology stocks have been on a tear in recent months as investors flock back into the sector — and so has the valuation for the broader group. Since October’s lows, the forward price-to-earnings multiple for the S&P 500′s information technology sector is up more than 30%. It’s up from about 19 times to nearly 25 times, with the sector gaining 17.5% since the start of 2023.

UBS on recession: UBS has said that dividend stocks are safe picks during a recession. The bank said that dividend stocks, on average, outperformed the market by 4.5% during the 2001, 2008, and 2020 recessions. Investing strategies focusing on dividend growth have been significantly less volatile than others, focusing on earnings and buyback growth.

Consumer confidence index rise: The consumer outlook brightened a bit in March, despite the crisis in banking. The board’s Consumer Confidence Index edged higher to 104.2, from 103.4 in February and ahead of the 100.7 Dow Jones estimate. In addition, the expectations index, which measures the short-term outlook, rose to 73, from 70.4. However, the index remains below the 80 level which is consistent with recessions. The inflation index also remained elevated, at 6.3% for the outlook over the next 12 months.

Credit Suisse analyst on semiconductor stocks: Credit Suisse analyst has said that semiconductor stocks are on pace for a solid first quarter, but that could be a sign that trouble is ahead. In the past month, semis have been on a tear and are now very overbought versus non-financial cyclical. The fundamentals for semis look good, and the desire for artificial intelligence amid the ChatGPT craze may boost demand, the sector trades at a premium not only on price-to-earnings but also on price-to-book and price-to-sales.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.

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