February 23, 2018 Weekly Market Recap

Equities advanced this week thanks to a last-minute rally on Friday that reclaimed losses registered on Tuesday and Wednesday. The S&P 500 and the Dow Jones added around 0.5% apiece, while the tech-heavy Nasdaq outperformed, jumping 1.4%.

The Wednesday release of the minutes from the January FOMC meeting was perhaps the most notable event of an otherwise relatively quiet week. The minutes did reveal that almost all FOMC members expect inflation to increase in 2018 and that a majority of members believe a stronger outlook for economic growth raises the “likelihood that further gradual policy firming would be appropriate.”

The yield on the benchmark 10-yr Treasury note ticked up to a four-year high on Wednesday following the minutes, closing at 2.94%, but slipped back to 2.87% by Friday’s close – finishing flat for the week. Meanwhile, the 2-yr yield jumped to 2.26% following the minutes, its highest level since September 2008, but finished Friday at 2.24%.

In corporate news, shares of Wal-Mart (WMT) tumbled 10.2% on Tuesday after the world’s largest retailer reported lower-than-expected earnings for the fourth quarter and issued disappointing profit guidance for fiscal year 2019. Conversely, Hewlett Packard Enterprise (HPE) rallied 10.5% to a new all-time high on Friday after reporting better-than-expected earnings and revenues and issuing upbeat profit guidance. HPE also announced a plan to return $7 billion to shareholders via share repurchases and a dividend increase.

As for the sector standings, seven of eleven S&P 500 groups finished the week in positive territory. The technology (+1.9%), materials (+1.3%), and energy (+1.0%) groups finished at the top of the leaderboard, while the consumer staples (-2.3%) and utilities (-2.4%) sectors finished at the bottom.

The S&P 500’s 50-day simple moving average (2731) proved to be an area of resistance for the benchmark index on several occasions this week, the most notable of which was on Thursday when the S&P 500 retraced the entirety of a 1.2% intraday gain after hitting the key technical level. However, the S&P 500 finally managed to climb above its 50-day simple moving average on Friday, which helped fuel further buying to bring the index into positive territory for the week.

Following this week’s trading, the S&P 500 is down 4.4% from the record high it hit on January 26.

Source: Briefing Investor