Stocks Posted Losses For the Week

Weekly Wrap Content for the week of Feb 10:

1. Week 6 major indexes performance;

2. Week 6 US sector indexes performance;

3. Major indexes weekly charts of support and resistance levels;

U.S.

For the week ended Feb 10, 2023, major U.S indexes ended lower in a week with relatively few important economic releases or other concrete drivers of sentiment. Sector performance was relatively uniform within the S&P 500 Index, with energy stocks being the notable upside outlier and communication services shares the prominent laggard. Some uncertainty and volatility returned to markets. The S&P 500 was down over 1.0% on the week, its worst week of the year thus far. Refer to major indexes’ weekly performance tables below.

Key highlights for the week and outlook:

1.    Inflation continues to moderate. Better inflation data has been a key driver for markets over the past several months. Headline CPI inflation in the U.S. has come down for six straight months. Market forecasts now call for headline inflation to fall to under 4.0% by year-end and closer to 2.5% by 2024. The next CPI inflation reading in the U.S. is on Tuesday, with expectations for headline inflation to fall from 6.5% to 6.2% and core inflation to fall from 5.7% to 5.4% annually. Any negative surprises could spark outsized market volatility. 

2.    Fed not done. Federal Reserve sees rate hikes continuing as needed. Some believe that after the strong jobs report last month, the final fed-funds target rate could move above the 5.1% outlined in the Fed's last "dot plot." As a result, Treasury yields have moved higher recently, and higher yields broadly have put downward pressure on markets, especially higher-valuation and longer-duration parts of the market. 

3.   Chatbot led Artificial intelligence(AI) takes centre stage. AI and innovation once again make the headlines. The Microsoft-backed ChatGPT has already added 100 million active users, just two months into its launch, making it the fastest-growing app in history. The open-market competition between highly skilled tech players could lead to innovations that benefit all consumers. More innovation can ultimately lead to higher productivity, which supports better potential economic growth rates over time.

4.   Earnings mixed. About 70% of companies in the S&P 500 have reported fourth-quarter earnings, and results have been mixed at best. Of these companies, about 70% have had positive earnings surprises, well below the five-year average of 77%.

SPX sectors in play

Only one out of 11 sectors within the SPX index closed positive for the week. Energy(XLE) was the only sector closed up, Communication Services(XLC) lagged.

The most significant stock-specific event for the broad benchmarks was a plunge in shares of Google parent Alphabet, which lost roughly USD 100 billion in market capitalization on Wednesday and fell roughly 10% for the week. The shares plunged after Reuters reported that Google’s new artificial intelligence (AI)-based chatbot, Bard, mistakenly identified the first satellite to take a picture of an exoplanet in its first public demonstration on Monday. Refer to below sector ETFs weekly performance table.

Indexes technical levels

Major indexes were lower. SPX pulled back to just above its 20dma after previous week’s golden crosss between 50 and 200dma—still a bullish sign. Dow still strapped within its six-week sideway consolidation range. Nasdaq fell for the 1^st week after five-week up row. Refer to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Chinese equities retreated as the spy balloon controversy fanned tensions with the U.S. and offset expectations of faster economic growth following China’s exit from pandemic controls. The Shanghai Stock Exchange Index and the CSI 300 Index both recorded slight declines for the second straight week as the diplomatic crisis over the balloon in U.S. airspace reminded investors of the geopolitical risks of investing in the country.

Key highlights for the week and outlook for China/HK:

1.    The spy balloon incident raised the prospect of further sanctions on China from the U.S. after the Biden administration announced a sweeping ban on U.S. companies selling advanced semiconductors and certain chip manufacturing equipment to China last October.

2.    Investors appear to have turned more cautious about China’s outlook following a three-month rally driven by reopening optimism that began last November amid speculation that China was preparing to unwind its strict zero-COVID policy, which Beijing rolled back in December.

Technically, SSE fell for 2^nd week after a four-week good rally previously, and Hang Seng Indexes recorded 2^nd weekly losses after previous six-week up streak. Both indexes appear in “healthy” profit-taking mode.

SSE weekly chart

.HSI weekly chart

Singapore

STI index fell 23.6points or 0.70%, its 2^nd weekly loss in a row, technical appear that bulls are in absolute charge and we are looking for further upside move. Next level to watch is previous high 3466 in Mar 2022.

STI weekly chart

 Source: Contents/Data including information from various public market reports