First Half Check for Stocks

Weekly Wrap Content for the week of June 30:

1. Week 26 major indexes performance;

2. Week 26 US sector indexes performance;

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

U.S.

For the week ended June 30, 2023, positive growth and inflation surprises helped the major benchmarks round out a solid quarter on a high note, with the S&P 500(SPX) Index recording its best weekly gain since the end of March. The SPX ended on its highest close in more than 14 months and the Nasdaq Composite (COMP) gained nearly 32%-- its strongest first-half performance in four decades (since 1983). The rally also broadened, with small-caps and value shares outperforming, the small-cap index Russell 2000 outperformed with 3.68% weekly gains. Refer to major indexes’ weekly and YTD performance table below.

Monthly index performance for June:

Key highlights for the week and outlook:

1.    Inflation data released Friday appeared to provide the biggest boost to sentiment. Personal consumption expenditures (PCE) price index had increased by 0.1% in May, bringing its year-over-year increase down to 3.8%, its lowest level since April 2021. The core (excluding food and energy) PCE index, considered the Federal Reserve’s preferred inflation gauge, fell back to 4.6% on a year-over-year basis, still well above the Fed’s 2% target, but seemingly calmed fears of a reacceleration in price pressures after April’s upside surprise. 

2.    Apple(AAPL) closed trading Friday with a market capitalization above USD 3 trillion, marking a first for a publicly traded company. The Wall Street Journal reported that Apple’s valuation has surpassed that of five of the S&P 500’s 11 sectors in their entirety (materials, real estate, utilities, energy, and consumer staples). 

3.    Nvidia (NVDA) rose nearly 4% after a Daiwa analyst upgraded the company's shares to "outperform" from "neutral" and boosted his price target to $475 from $408, citing Nvidia's "commanding" position in generative artificial intelligence. Nvidia shares ended around $423, nearly triple where they were at the end of 2022. 

4.    Strong starts are a good sign. The 16% return for the S&P 500 in the first half of 2023 is the fifth-best start since 1990. In those four better instances, the market recorded an average return for the full year of 33%. Based on data from Bloomberg.

SPX sectors in play

All 11 sectors within the SPX index closed positive for the week. Energy(XLE) and Tech(XLK) outperformed, led by Apple(AAPL) and Nvidia(NVDA). While the typical defensive Consumer Staplers(XLP) and Health Care(XLV) lagged. Refer to below SPX sectors ETF weekly performance table.

For the first half of this year, tech sector outperformance has been a key theme so far this year, but the leadership within the sector has been concentrated in a few of the mega-cap names. Apple (whose market cap reached $3 trillion last week), Microsoft, Tesla, Amazon, Alphabet (Google), NVIDIA, and Meta gained an average of roughly 85% in the first six months of this year. This means the breadth of the market's gains has been fairly narrow, as demonstrated by the 16% year-to-date(YTD) gain in the S&P 500 and 7% for the small-cap index Russell 2000.

Indexes technical levels

All three major indexes i.e Dow, SPX and COMP closed on their highs. Dow rebounded to near its multi-months’ high which is technical resistance around 34,400 level, where both SPX and COMP weekly candles very bullish, further upside move expected. to below indexes weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks ended mixed, as weak economic indicators offset optimism that the government might implement additional measures to bolster economic growth. The Shanghai Stock Exchange Index(SSE) gained 0.14%, but the blue chip CSI 300 lost 0.56%. In Hong Kong, the benchmark Hang Seng Index(.HSI) rose 1.1% after hitting a six-month low earlier in the week. Hong Kong stocks inched up 0.14%.

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

1.    China’s official manufacturing Purchasing Managers’ Index (PMI) ticked up to 49.0 in June—in line with expectations and an improvement from the 48.8 registered in May. Nevertheless, PMI readings less than 50 indicate a contraction in activity.

2.     Premier Li Qiang, the country’s second-ranking official, asserted that China is on track to reach its annual growth target of about 5%. Speaking at the World Economic Forum’s annual meeting, Li pledged that Beijing would roll out more practical and effective measures to strengthen domestic demand, boost markets, and support the country’s development and growth.

Technically, the SSE index fell back to its level around Jan 9 this year given back nearly all its YTD gains. Hang Seng Index (. HSI) underperformed as it lost 4.37% for the first half and closed just beneath 19,000 support level. It appears weak on its weekly chart.

SSE weekly chart

.HSI weekly chart

Singapore

For the first half of this year, The STI index lost 1.4%, the index has been largely trading in sideway consolidation mode for the past seven weeks, following the three local banks which are the major part of this index.

STI weekly chart

Source: Some contents and data excerpted from various public market reports.