In this weekly market analysis, we meticulously dissect various asset classes, sectors, equity categories, and exchange-traded funds that influenced market dynamics. This scrutiny helps decipher significant money flows and their sources, distinguishing winners from losers.
S&P 500 Continues its Retreat
The S&P 500 witnessed a marginal 0.5% increase this week. It stands 6.2% below the peak reached on July 31, 2023. The market is presently absorbing its gains while contending with escalating interest rates.
A Glimpse at Monthly Performance
October began positively after setbacks in August and September, as evidenced in the monthly returns chart.
The Bull Market’s Trajectory
The S&P 500 exhibited a 20.4% gain from its low in October 2022 to the close on Friday. However, it remains 10.2% below its record-high close on January 3, 2022.
Golden Cross Analysis
The market assumed a Golden Cross configuration on February 2, 2023 (when the 50-day moving average surpassed the 200-day moving average). The widening spread between these averages, currently at 5.0%, double the long-term average of 2.3%, indicates an ongoing retreat. Additionally, the downward trend of the 50-day line suggests a loss of upward momentum.
Performance Across Major Asset Classes
Volatility emerged as the standout performer last week, reflecting investors’ readiness to pay higher premiums for downside risk hedging. Conversely, Commodities, especially oil, experienced a decline of 10.8% from its recent peak due to rising costs of holding precious metals such as gold and silver.
Equity Sector Insights
Technology and Communication Services sectors demonstrated resilience, whereas Energy, Retail, and Consumer Staples faced challenges due to higher rates and the winding down of the summer travel season.
Semiconductor stocks, notably Nvidia, stood out, whereas cannabis stocks and energy-related ETFs faced significant declines.
Stock Performance Highlights
Pitney Bowes Inc. (PBI) experienced a surge after Argus Research raised its price target, while Ebix, Inc. (EBIX) faced a 26% decline due to reclassified revenue from co-branded prepaid cards.
The dominance of the top 7 stocks in the S&P 500 persists, accounting for 85% of the year-to-date gain.
While the broader market experiences a pullback, attention remains on these leading stocks, which have yet to show signs of weakness. Investors appear to be reallocating investments across a spectrum of equities, indicating a shift from expensive market leaders to a broader market segment.
Continued monitoring of these developments is essential to understanding the evolving market dynamics.