S&P 500 tops 5,000 for the first time ever

The S&P 500 closed the week at 5,026.61, a new record high, notching its fifth straight winning week with a gain of 1.37% (+5.38% year-to-date). The Nasdaq Composite advanced 2.31% (+6.52% YTD) thanks to tech stocks, boosted by the semiconductor sector in the wake of Arm Holdings plc (ARM). Arm stocks soared 62.27% week-over-week after the British chip designer's current quarter guidance topped Wall Street estimates as customers aim to design new chips for artificial intelligence work, generating higher royalties.

The graph below highlights the outperformance of dominant companies in the field of artificial intelligence.

In Europe, stock indices finished the week in scattered order. The CAC 40 was up 0.73% (+1.38% YTD), pushed higher by luxury giants LVMH (up 3.78%) and Hermes (up 7.49%). By contrast, the DAX was flat (+0.05% WTD, +1.04% YTD), and the FTSE 100 lost 0.56% (-2.08% YTD). Data showed that the eurozone is languishing in an economic slump. German factory output fell for a seventh straight month in December. Production declined by 1.6% against an expected drop of 0.4%. The hardest hit sectors are the chemical industry and construction. In France, the situation is not better with a trade deficit that widened at the end of December, standing at €6.83 billion compared to €5.94 billion at the end of November. Against this gloomy backdrop, ECB Governing Council member Fabio Panetta said that "the time for a reversal of the monetary policy stance is fast approaching."

In Asia, Japan’s Nikkei 225 gained momentum, aided by purchasing managers index data which showed the country’s services sector grew more than expected in January. The benchmark index breached the 37,000 mark for the first time in 34 years during the Friday session but pared gains to finish 2.04% higher for the week at 36,897.42 (+10.26% YTD). Furthermore, BOJ Governor Kazuo Ueda stated that monetary conditions would stay easy even after the termination of the central bank's negative interest rate policy.

In China, the Shanghai Composite bounced back by 4.97%, erasing some of the heavy losses posted last week. However, it remains in negative territory (-3.67%) since the start of the year. Chinese stocks surged as sovereign fund Central Huijin Investment Ltd has vowed to buy more ETFs to support local equity markets amid persistent deflationary pressure. Producer prices fell for the 16th consecutive month.

Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.