Wall Street Cheers Nvidia 

Once again, U.S. stock markets were pushed higher by Nvidia stocks (NVDA). They soared 24.57% (up 166.50% year-to-date) after the world's most valuable listed chip company forecast strong current-quarter revenues, adding it was ramping up supply to meet surging demand for its artificial intelligence chips. The tech-heavy Nasdaq Composite jumped 2.51% week-over-week in the wake of Nvidia’s stellar performance while the S&P 500 edged up 0.32%. By contrast, the Dow Jones was down 1.00%, bringing it back in negative territory for the year (-0.16%). The Nasdaq Composite’s year-to-date return in excess to the Dow Jones now amounts to more than 24%.

In Europe, the MSCI EMU dropped 1.51% for the week (+13.50% YTD) and the FTSE 100 fell 1.67% (+2.35% YTD). In Asia, Japan’s Nikkei 225 index maintained its momentum with a gain of 0.35% (+18.48% YTD), extending its winning streak to seven weeks. India’s Nifty 50 and Korea’s Kospi fared well, rising by 1.63% (+2.18% YTD) and 0.83% (+14.42%) respectively.

On the flip side, the Hang Seng plunged 3.62% (down 5.25% YTD) and the Shanghai Composite fell 2.16% (up 3.99% YTD) as optimism over China’s economic recovery is fading after the disappointing data released by China’s National Bureau of Statistics.

Furthermore, China has prohibited local infrastructure operators from acquiring chips manufactured by Micron, the renowned U.S. semiconductor giant. This action marks the latest escalation in a series of measures taken by both nations, driven by national security apprehensions surrounding semiconductor trade. The timing of this ban coincided with the recent G7 summit, where leaders condemned Beijing's “non-market policies and practices, which distort the global economy.”  

Tech Sector Pushed Higher by Chipmakers     

The S&P information technology sector, which includes the semiconductor industry, jumped 5.12% week-over-week, riding the wave of AI-related chips after the growth forecast from Nvidia. IT is the best performer within the S&P sectors so far in 2023, up 33.97%. Communication services added 1.20% for the week (up 32.35% year-to-date) as Meta Platforms (META), Netflix (NFLX), and Alphabet-Google (GOOG), continued to shine, up 6.68%, 3.70%, 1.77% week-over-week respectively. The consumer discretionary sector managed to stay above the flatline (+0.36%), boosted by Amazon (AMZN, up 3.32%) and Tesla (TSLA, up 7.23%). As announced by Elon Musk, Tesla Model Y has become the world’s bestselling car, surpassing Toyota’s Corolla in the first quarter of 2023.

All the other S&P sectors closed the week in the red, with negative year-to-date returns. Energy remains the worst performer over the year (-10.39%). The sector lost 1.11% for the week though oil prices rebounded for the second straight week (WTI up 1.57%) after industry data registered a sharp drop in U.S. inventories, pointing to tighter supplies as the U.S. driving season draws nearer. Utilities were also a big drag within the S&P 500, down 2.40% over the week (-9.02% YTD) amid rising yields as markets are growing less confident that the Federal Reserve will keep rates on hold next month. Other defensive sectors took a hit this week, with health care down 2.93% (-6.42% YTD) and consumer staples down 3.21% (-1.83% YTD). The same was true of industrials (-1.43% for the week, -0.12% YTD) and financials (-1.54% for the week, -6.48% YTD), with the latter coming under pressure from renewed selling in regional banks.