Stocks around the globe were mixed this week as investors digest further commentary from Fed officials alongside ongoing corporate earnings results. After market breadth improved in the final months of 2023, recent outperformance was concentrated at the top with the largest 10 companies in the S&P 500, reaching the highest concentration since the “Nifty 50” over five decades ago. In bonds, interest rates continued to drift higher, with the yield on the 2-year and 10-year Treasury notes trading around 4.42% and 4.11%, respectively, mid-week.
With nearly two-thirds of S&P 500 companies having reported fourth-quarter results, corporate profits are poised to wrap up 2023 on a strong note. Technology and communications stocks continue to see strong earnings growth, while energy stocks have seen tighter commodity prices weigh on results.
Outside of earnings, markets have spent the last week adjusting to the possibility of higher rates for longer. Following the FOMC policy announcement last week and a host of Federal Reserve speakers this week, the probability of a rate cut at the next meeting in March have fallen to less than 25%.
On the data front, the standout this week was the ISM and S&P Services PMI index reports, which both came in better than expected, highlighting ongoing strength in the economy. This is a relatively quiet week on the economic data front, and next week will bring more potentially market-moving data with the CPI inflation report as well as retail sales, among others.
Source: GSAM, CNBC, JPMorgan
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