Stock Market This Week (US): Why did Nasdaq soar 5% this week?

Stock Market This Week (US)

All the major indices closed higher for the week. The tech-heavy Nasdaq was the best-performing index for the week after rising 4.82%. The S&P jumped 2.67%, while the Dow added 2%.

US stock market this week: Stocks movement this week

The US stock market closed mixed on Monday as investors were considering a soft landing of the US economy by the Fed. Nasdaq gained over half a percent due to the strong performance of large-cap technology stocks, especially semiconductor stocks.

On Tuesday, the US market continued to increase while investors waited for economic data and corporate earnings coming later in the week. The Nasdaq once again led the way, gaining 1%. Tuesday marked the first three-day win streak for the technology-heavy index since November.

The US stock market continued to rise on Wednesday as all major indices closed over a percent higher. Based on CPI data, bond yields also pulled back. It was also a big day for meme stock - Bed Bath & Beyond - punctuated by a 68% gain.

On Thursday, the US market closed higher after December’s consumer price report showed inflation cooled for the month. It raised hopes the Fed can once again slow interest rate hikes. Nasdaq continued to increase for the fifth consecutive day.

The US stock continued to inch higher on Friday as investors digested bank earnings and bet inflation would ease in 2023. All the major indices started the day on a negative note but made a comeback to close higher. Banks' earnings weighed the market on the last trading day of the week.

Key highlights of the week:

CPI data: Headline prices fell 0.1% in December, lower than expected and the first decline since May 2020. The drop brought the year-over-year gain to 6.5%, its lowest level since October 2021. The 12-month increase in core (less food and energy) consumer inflation fell as expected to 5.7%, the slowest pace in over a year.

Result seasons: The result season in the US kicked off this week, with major banks reporting their results. Wells Fargo reported that its profit for the last quarter had been cut by half. It added that it is preparing for the economy to get worse than it’s been over the last few quarters. JPMorgan Chase posted revenue that beat expectations, but it warned it’s setting aside more money to cover credit losses. Delta Air Lines reported earnings and revenue that beat estimates for the final quarter of 2022.

Companies cutting 2023 earning estimates: As per analysts at Berenberg, 59% of S&P 500 stocks have seen their 2023 earnings estimates cut over the past month, marking the third-biggest portion of downgrades in the past 40 years. Based on 12-month forward consensus earnings, the net balance of upgrades/downgrades is hitting a tipping point, as the US economy heads into net downgrade territory. When this has happened previously during the past 30 years, there has subsequently been a reason for meaningful earnings reset over the following 1-2 quarters.

US Treasury yield: The cooling inflation data helped U.S. Treasury yields to continue trending lower, with the yield on the benchmark 10-year US Treasury note falling on Friday morning to an intraday low of 3.43%, its lowest level since soon after the Fed’s mid-December meeting.

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.