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Nasdaq tops all major U.S. stock indexes higher
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Cons discr leads S&P 500 sectors, none in decline
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PCE index moderates, cooler than expected
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STOXX Europe 600 up ~0.7%
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U.S. 10-year Treasury yield at 3.53%
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S&P 500 SECTORS IN Q1: THE GOOD, THE BAD AND THE UGLY (1030
EDT/1430 GMT)
The S&P 500 index has had a decent run this
quarter, given that markets weren't looking too hot entering
2023 in the face of both high inflation and interest rates.
But let's not forget the mini-banking crisis in the United
States and Europe, fears of which seem to have subsided in
recent trading sessions, yet were enough do some serious damage
the U.S. market and inadvertently buttress some unloved
candidates.
No surprises that the S&P 500 banks index was the top loser for the quarter, shedding some 14% during Q1, while the financials index came in second with declines of 7%. There were $600 million outflows from financial equity funds this week, according to BofA Global Research, though expectations the turmoil could lead to a slower pace of central bank rate hikes meant funds investing in tech stocks saw $400 million in inflows.
The S&P 500 technology index jumped about 20% in
Q1, and within the sector battered semiconductor stocks were the
biggest winners, with the Philadelphia SE Semiconductor index surging some 27% after recording its worst performance
last year since the Great Financial Crisis.
"Large cap tech stocks are leading the tape due to their dependable cash flows as we head into a slowing economic climate. Lower interest rates provide support for their elevated valuations," said Richard Saperstein, chief investment officer at Treasury Partners.
Also worth noting was certain high-dividend paying sectors,
including energy and utilities , were also
among top decliners for the quarter, clocking declines of about
6% and 5% each.
The PHLX Housing index rose about 8% in Q1, while the S&P 500 real estate index , which houses many commercial real estate firms, fell 1.1%.
"We have been less concerned about this in housing because unemployment, which is usually the trigger for forced sales and collapsing house prices, is not expected to rise that sharply," Andrew Burrell, chief property economist at Capital Economics said last week.
"Commercial markets are more vulnerable, most notably offices where home working has changed long-term asset viability."
(Shreyashi Sanyal)
*****
WALL STREET LIKES THE GOLDILOCKS PCE DATA (1010 EDT/1410 GMT) March is going out like a lamb, with the core PCE index coming in slightly cooler than expected, and equity markets love it.
All major stock indexes on Wall Street were up on Friday, as were the major bourses in Europe, after a mostly in-line to slightly cooler reading
Consumer discretionary led all 11 S&P 500 indices
higher, with no sector in decline.
Small caps , Dow transports and semiconductors rose, as did growth and value stocks.
The personal consumption expenditures (PCE) price index for
February increased 0.3% month over month after accelerating 0.6%
in January. In the 12 months through February, the PCE price
index advanced 5.0% after rising 5.3% in January.
Core PCE climbed 0.3% after increasing 0.5% in January, and
on a year-on-year basis rose 4.6% last month after gaining 4.7%
in January.
"Overall a lot of this would still line up with a soft
landing. But the unequivocal issue is what's going to happen in
credit, and that's uncertain at this point," said Dec Mullarkey,
managing director of investment strategy and asset allocation at
SLC Management in Boston.
"The Fed still goes ahead with a 25 basis point move when
they meet in May," he said.
Here is a snapshot of market prices in early trading:
(Herbert Lash)
*****
PUNCH BOWL OR PROHIBITION, THE FED DECIDES (0915 EDT/1315
GMT)
Is the Fed bringing back the punch bowl after inflation
decelerated a bit more on Friday as many stock investors clamor
for, or are policymakers going to declare an era of moderate
Prohibition is in store - in line with glum bond investors?
The yield on two-year Treasury notes , which move
in step with interest rate expectations, slid 7 basis points
after the personal consumption expenditures (PCE) price index
for February was released. Stock futures were edging higher.
Boston Fed President Susan Collins told Bloomberg TV that
PCE, which the U.S. central bank tracks for its 2% inflation
target, was "about what was expected" and that the Fed "still
has more work to do to lower inflation."
PCE increased 0.3% last month after accelerating 0.6% in
January. In the 12 months through February, the PCE price index
advanced 5.0% after rising 5.3% in January.
Core PCE climbed 0.3% after increasing 0.5% in January, and
on a year-on-year basis rose 4.6% last month after gaining 4.7%
in January.
(Herbert Lash)
*****
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