S&P 500 Extends Fifth Consecutive Weekly Gain

The S&P 500 extended its winning streak for the fifth consecutive week, as positive news from the Federal Reserve’s interest-rate pause and encouraging U.S. consumer confidence and spending data lifted the market.

On Friday, the S&P 500 dipped by 0.4%, with declines in tech stocks offsetting gains in utilities, materials, and consumer staples. The Dow Jones Industrial Average also fell by 0.3%, while the Nasdaq Composite experienced a 0.7% loss.

Additionally, Treasury yields saw a slight increase, with the 10-year yield rising to 3.768% compared to Thursday’s 3.727%.

Notably, the stock and bond markets in the U.S. will be closed on Monday in observance of the Juneteenth holiday.

Investors have been cautiously optimistic about the possibility of managing inflation without causing a significant economic downturn. The Fed’s decision to hold borrowing costs steady and their intention to implement two more rate increases this year have contributed to this sentiment.

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“The rally is expanding across various sectors of the economy beyond just technology,” said Tony Roth, Chief Investment Officer at Wilmington Trust. “This indicates that the market believes we are avoiding any significant economic slowdown.”

Recent data has shown an increase in U.S. consumer confidence and spending despite rising borrowing costs. The University of Michigan’s consumer-confidence survey for June recorded a reading of 63.9, surpassing expectations and reflecting growth from May’s 59.2. In addition, the Commerce Department reported a 0.3% increase in retail spending in May compared to April, defying economists’ projections of a 0.2% decline.

Throughout the week, cruise operators and airlines were among the top performers in the S&P 500. Carnival led the index with a 21% gain, while Norwegian Cruise Line Holdings followed with an 11% increase. Southwest Airlines rose by 12%, and Delta Air Lines climbed by 8.9%. Cosmetics maker Estée Lauder and Domino’s Pizza recorded gains of 16% and 11%, respectively.

Cava Group, a Mediterranean restaurant chain, experienced an impressive 99% surge during its market debut on the New York Stock Exchange. Although the stock dipped by 13% on Friday, its initial success provided a boost to the relatively sluggish IPO market of the past 18 months.

Conversely, Nasdaq, a rival exchange operator, faced losses during the week. Its shares concluded the week down by 11% after announcing a $10.5 billion acquisition of a bank software maker.

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The market’s recovery this year has been largely driven by a handful of dominant technology firms, such as Nvidia, the first trillion-dollar chip maker, and Meta Platforms, the parent company of Facebook, which has more than doubled in value in 2023. However, concerns have arisen among money managers regarding the sustainability of the rally if these companies encounter challenges.

Randy Watsek, a financial adviser at Birch Lane Group of Raymond James in New York, advised investors to consider alternative opportunities. He emphasized the importance of identifying companies with strong cash flow and manageable debt burdens.

“Although the market appears to be thriving, it is not going full force,” Watsek said. “If you look broadly, you can find companies trading at reasonable valuations.”

Internationally, most markets saw gains on Friday. Hong Kong’s Hang Seng Index rose by 1.1%, while the Shanghai Composite increased by 0.6% due to expectations of significant stimulus measures from Beijing. The Stoxx Europe 600 index also added 0.5%.

In Japan, the Nikkei rose by 0.7%, reaching a new 33-year high before closing.