January 26, 2024, Weekly Stock Market Return Recap. All US equity indexes finished the week in the green, lead by the S&P 500 +1.1%, followed by the Nasdaq +0.9% and the Dow Jones +0.7%. On the economic front, core inflation, which excludes volatile food and energy prices, slowed to 2.9%, a sharper decline than economists were expecting and the most muted rate since March 2021. The market has been uplifted on the year with data showing the ideal scenario for stocks, one where you have both a resilient economy and moderating inflation all which elevate hopes that the Federal Reserve rate cuts will come sooner than later.

January 19, 2024, Weekly Stock Market Return Recap. The broad market stock index closed the week at a new high, with the S&P 500 gaining 1.1%, while the Nasdaq outperformed with a 2.26% weekly return. Stocks continue to be bolstered by rate cuts and positive earnings expectations. All three major equity indices are now up on the year, as this week moved the Dow Jones and Nasdaq out of the red on a year-to-date basis.

January 12, 2024, Weekly Stock Market Return Recap. For the week. The S&P 500 recovered in the week, finishing 1.84% up from last Friday. The broad market stock index currently stands up 0.86% for the year, and now sits just 0.27% below its record close from January 3, 2022. Consumer prices increased more than expected in December as investors continue to look for signs the Federal Reserve can begin to cut interest rates. The December Consumer Price Index (CPI) showed prices ticked up slightly at 0.3% over last month, an increase from the 0.2% seen in November. Prices rose 3.4% over the prior year, an increase from the 3.1% increase seen the month prior. Economists expected prices to increase 0.2% month over month and rise 3.2% year over year.

January 5, 2024, Weekly Stock Market Return Recap. For the week, the S&P 500 notched its first losing week since October on technology stock weakness and an unpleasant hot jobs report.  The Dow Jones Industrial Average slipped 0.7%, the S&P 500 declined 1.5% and the tech-heavy Nasdaq fell 3.2%; bonds declined sharply. December job numbers blew out expectations for December at 216,000 jobs gained, Economists were projecting the U.S. to add roughly 170,000 jobs last month, according to consensus estimates. The Fed released minutes from the U.S. central bank’s Dec. 12-13 meeting released Wednesday, indicating that officials are largely optimistic about the path of inflation, and expect to begin reducing rates sometime this year. Fed Chair Powell told reporters at the post-meeting press conference, “We added the word ‘any’ as an acknowledgment that we are likely at, or near, the peak rate for this cycle but participants also didn’t want to take the possibility of further hikes off the table.

The year of 2023 was a year for growth stocks, but many other equity sectors participated by ending on a positive note. Notably, the technology communication growth sector’s sharp outperformance is unusual because normally when you have a bear market, the leadership for the next bull market is different. Insofar as the S&P 500 finished the year up 26%, it was largely propelled by two sector leaders: Information Technology, up an astounding 58%, and Communication Services close behind, up 56%. Conversely, Utilities and Energy posted -7% and -1% losses on the year, while Consumer Staples and Healthcare were laggards at 0.5% and 2%, respectively.

Financial pundits have made much ado about the “Magnificent Seven” stocks and their impact on S&P 500 returns during 2023. This financial conundrum is worthy of analytic revisit given the lopsided risk these stocks could pose in 2024. First, the combined weight of these companies is greater than any combined weight of the top seven companies in the history of the S&P 500. Second, these seven stocks now account for more than one-quarter of the S&P 500 index weighting. This overdependence on such a narrow stock group can be risky, leaving markets vulnerable to a downturn should the fortunes of the Magnificent Seven falter.