Weekly Market Recap: Tech Sector Shines Amid Rate Jitters and Commodity Weakness

Market Overview

U.S. equities experienced a mixed week. The S&P 500 remained flat, while the Nasdaq Composite gained over 1%, hitting a new all-time high driven by strong earnings from NVDA. The Dow Jones lagged due to weak performances from Home Depot, Intel, and McDonald's. The technology sector, led by NVDA's 13% rise, outperformed, while rising interest rates impacted small caps and energy sectors.

International markets faced challenges, especially in Asia, due to a stronger dollar and U.S. rate concerns. The Hang Seng and mainland Chinese equities were notably weak, impacted by property market concerns and geopolitical issues. European and Japanese markets ended the week slightly lower.

In fixed income, the Bloomberg Aggregate Bond Index dipped slightly as Treasury yields rose across the curve, with the 2-year yield up by over 0.10%. Despite the higher rate environment, corporate credit issuance remained strong, totaling over $1.5 trillion this year, split between investment grade and high yield issuers. Refinancing activity also saw significant volumes, providing an extended runway for borrowers.

Commodities traded lower overall, with the Bloomberg Commodity Index down 0.5%. Energy and metals saw notable declines, driven by rising real yields and a stronger dollar. However, agricultural commodities like cocoa and wheat experienced strong gains due to market dynamics and supply disruptions.

Federal Reserve Insights and Economic Roundup

The Federal Reserve's May meeting minutes suggested potential rate hikes, causing some market jitters. Despite April CPI data indicating easing inflation, Fed officials need more evidence of a favorable trend towards their 2% target. Current expectations are for a rate cut later this year, though policy remains restrictive for now.

The University of Michigan's consumer sentiment survey revised inflation expectations down to 3.3% from an initially reported 3.5%. While still high, the revision indicates less pessimism among consumers. Overall sentiment improved slightly but remained low, reflecting uncertainty about future big-ticket purchases and potential risks to summer spending.

The Week Ahead

Key economic data scheduled for the upcoming week includes:

Monday: Markets Closed (Memorial Day Holiday)

Tuesday: Conference Board Consumer Confidence & Expectations

Wednesday: Federal Reserve Beige Book

Thursday: First Quarter GDP (2nd release); Personal Consumption

Friday: Personal Income and Spending; PCE Deflator