In this weekly analysis report, a meticulous examination of diverse asset classes, sectors, equity categories, and exchange-traded funds unfolded. Our scrutiny delineates the upward movements and segments that resisted prevailing trends, shedding light on significant financial flows and their origins.
S&P 500 Downturn Deepens
The S&P 500 experienced a 2.4% decline throughout the week, marking a 7.9% decrease from the peak recorded on July 31, 2023. The market is presently assimilating prior gains while grappling with the challenges of escalating interest rates.
Monthly Performance Recap
A detailed review of the past year’s monthly returns revealed that October started negatively following market setbacks in August and September.
Bull Market Insights
Analyzing the S&P 500’s 18.1% surge from the October 2022 low to the recent close, the index now stands 11.9% below its peak on January 3, 2022.
Golden Cross Formation
The market embraced a Golden Cross configuration on February 2, 2023, with the current spread between the 50-day and 200-day moving averages at 3.5%, slightly above the long-term average of 2.3%.
Major Asset Class Performance
Volatility emerged as the top performer last week, reflecting investors’ willingness to pay higher premiums for downside risk hedging. Conversely, the Asia 50 index faced notable weakness due to ongoing declines in the Chinese equity market.
Insights into Equity Sectors
Retail, Consumer Staples, and Energy sectors displayed resilience, while Autos faced significant setbacks, notably Tesla (TSLA), plummeting by 15% amid prolonged strikes.
Analysis of Equity Groups
All equity groups experienced declines, with the S&P top 7 tech stocks witnessing the most significant downturn, indicating a concerning trend of market narrowing.
Performance of the S&P Top 7
Microsoft (MSFT) displayed the most robust performance among the leading seven mega-cap stocks, whereas Tesla and Nvidia (NVDA) faced substantial declines, highlighting the trend of market participation contraction.
Highlights from ETF Performance
Bitcoin displayed a notable rally but remains 48% below its peak in October 2021. Gold and silver experienced gains as investors sought safety in these havens.
Stock Market Performance
Victoria’s Secret (VSCO) observed a surge after reverting to its “sexy” branding image. At the same time, Solaredge (SEDG) and Enphase (ENPH) faced significant declines due to diminished demand caused by higher interest rates.
The influence of the top 7 stocks on the market remains paramount, constituting 87% of the S&P 500 year-to-date gain. Since the peak on July 31, the S&P 500 has retreated by 7.9%, paralleling the 7.7% decline in the top 7 cohort. Market leadership appears to be contracting again, prompting vigilant observation as the pullback unfolds. As of now, these select entities continue to shape market dynamics.