Big Tech Propels the S&P 500 to New High

The S&P 500 closed the week on a record close at 4,839.81 (up 1.17% week-over-week), above the key 4,800 resistance level as investors continued to flock to big tech stocks on the heels of data indicating bolstered consumer sentiment and tempered inflation expectations. Investors jumped into the elite trillion-dollar club – Apple (+3.03%), Microsoft (+2.57%), Alphabet (+2.59%), Amazon.com (+0.47%), Nvidia (+8.74%), Meta Platforms (+2.39%) - in fear of missing out on further gains, pushing the benchmark indices higher. The tech-heavy Nasdaq Composite gained 2.26% for the week. By contrast, small cap stocks extended their losing streak to a fourth week (Russell 2000 down 0.34%).

In Europe, the major indices significantly underperformed their American peers, with the MSCI EMU down 0.84%. The FTSE did worse with a loss of 2.14%.

In Asia, the trends observed last week were confirmed. Once again, Japan’s Nikkei was the best regional performer over the week, rising 1.09%. Data released on Friday showed that Japanese inflation (CPI) fell as expected last month, setting the stage for an ultra-dovish Bank of Japan. The Taiwan-weighted index also fared well (up .96%).

On the flip side, India’s NIFTY 50 and Korea’s KOSPI slid 1.47% and 2.07% respectively. Chinese stocks also performed poorly for the third straight week, exacerbating the already fragile investor confidence as the world's second-largest economy faces a bumpy economic recovery. Moreover, China’s central bank unexpectedly kept its medium-term lending rates on hold on Monday. The Shanghai Composite was down 1.72% for the week.

Big Tech reigns supreme, Energy falls      

Once again, information technology was the best performer among the S&P sectors this week, up 4.31%, as investors continued to load up on megacap tech stocks amid ongoing optimism that growing demand for artificial intelligence will continue to spur growth. Chip stocks were particularly in the spotlight in the wake of TSMC (NYSE: TSM), the world's second most valuable semiconductor company, after the latter expressed confidence in its strong positioning to leverage the surge in AI development. The TSMC stock jumped 12.80% over the week.

In contrast, interest-sensitive sectors such as utilities and real estate took a nosedive (down 3.70% and 2.13% over the week respectively) as Treasury yields jumped after Fed Governor Christopher Waller downplayed the need for speed on rate cuts. The 10-year Treasury yield rose 18 basis points to 4.13% from 3.95%. The yield on the 10-year Bund moved in the same direction but with less magnitude, increasing by 6 basis points to 2.34%. ECB President Christine Lagarde hinted at possible summer rate cuts, provided policymakers can be sure inflation is in retreat.

Energy notched a second week in the red (down 3.08%). Oil prices swung between gains and losses amid persistent Middle East tensions, including new assaults on cargo ships in the Red Sea by Houthi rebels. Natural gas prices plummeted to a two-week low of $2.5/MMBtu, down 24% for the week as forecasts show forecasts reduced demand and increased output.

Lastly, the materials sector continued to sink for the fourth consecutive week with a loss of 1.49%. China's lacklustre economic growth has raised apprehensions about the future demand for commodities.