US stock benchmarks ended last week with solid gains, with the S&P 500 reaching its highest intraday levels since August 2022. The NASDAQ Composite notched its sixth consecutive weekly gain in strength among technology names.
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As last week drew to a close, investors watched carefully for signs of progress in debt ceiling negotiations. Technology stocks rallied, boosted by the 24% jump in chipmaker Nvidia, which took the company's market capitalization close to $1 trillion.
Stocks recorded solid gains this week, with the S&P 500 testing the 4,200 level intraday for the first time since late August. But part of what is driving S&P 500 performance is the rally among mega-cap tech stocks such as Alphabet, Meta, and chipmakers Nvidia and AMD in what could be characterized as an "AI" opportunity repricing of these names.
As first-quarter earnings season nears a close, investors have turned to evaluate inflation data and predictions about whether the next Fed move in June will be a pause or another rate hike.
As expected the Fed increased interest rates another 25 bps last week, taking the target range from 5-5.25%. While Fed Chair Jerome Powell's hinted that rates may be near the peak level for the cycle (a pause), a Fed pivot to cutting rates might not occur as soon as investors hoped.
Megacap tech stocks boosted market returns last week, with Microsoft, Apple, Amazon, and Meta Platforms accounting for roughly half of the market's strong weekly gain. Meta alone was up 14% on an earnings beat.
The major benchmarks finished mixed last week, with corporate earnings grabbing the spotlight from a relatively light calendar of economic data. One item of note, the CBOE VIX Index, a gauge of "fear" and volatility, hit its lowest level since late 2021, closing the week at 16.77.
The major benchmarks ended the week higher last week, as investors balanced the likelihood of recession versus signs that inflationary pressures are abating.
The first quarter of 2023 ended up being a rollercoaster ride for investors, ultimately ending on a bullish note, with the S&P 500 TR Index up 7.50% for the quarter and the tech-stock heavy NASDAQ Composite recovering with a gain of 17.05%.
Looking at the top ETF performers in the first quarter, crypto and blockchain ETFs topped the leaderboard. Bitcoin surged 73% in the first quarter. QQQ was also a beneficiary of the tech rally, gaining 18% YTD as tech stocks return to bull market territory. The key factor driving tech names is the decline in rate pressures.