U.S. Stocks Drop From Record Highs as Chipmakers Retreat

Join SgTraderClub Facebook group HERE for daily stocks and market updates, and more.

Weekly Wrap Content for the week of Mar 8:

1. Week 10 major indexes performance;

2. Week 10 US sector indexes performance;

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

U.S.

For the week ended Mar 8, all the three major indexes ended lower. Growing hopes that the Fed might begin cutting interest rates sooner rather than later appeared to help bring the large-cap S&P 500 Index(SPX) to new record intraday highs, alongside the Nasdaq Composite(COMP) before pulling back late Friday. On Friday, SPX and COMP reversed sharply from all-time highs as a semiconductor sell-off upstaged the jobs report. Refer to major indexes’ weekly performance table below.

Key highlights for the week and next:

1.    U.S. unemployment rate ticked to its highest in two years. The U.S. nonfarm-jobs report last week was somewhat mixed but overall pointed to early signals of a U.S. labor market that is cooling. The total jobs added in February were 275k, well above the expected 200k job gains. However, January’s figure was revised sharply lower, going from 353k to 229k, and the unemployment rate climbed notably higher, from 3.7% to 3.9%, now approaching its highest rate in two years. 

2.    Interest rate cut. Markets expect Fed rate cuts starting in June 2024. 

3.    Notably, Danish pharmaceuticals company Novo Nordisk(NONOF.OTC), which has seen robust demand for its diabetes and weight loss drugs, displaced Tesla on Thursday as the 12th biggest public company by market capitalization.

SPX sectors in play

Eight out of 11 sectors in the SPX closed with weekly gains. Small-cap and value shares outperformed, while mega-cap tech shares lagged due in part to a decline in Apple(AAPL) following reports about slowing iPhone sales in China. Industry-leader Nvidia (NVDA) sharply reversed course, rising to a record high around $974 earlier before ending down 5%. Broadcom (AVGO) sank 7%, its biggest single-day drop in four years, after reporting disappointing revenue. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

Both SPX and COMP indexes retreated from record highs and ended lower Friday as a sharp sell-off in semiconductor shares burdened the market. SPX remains near all-time highs and is now up nearly 25% since late October without a 5% or more pullback. It’s expected that equity markets may be due for a period of consolidation or pullback, although we do not see the scope for a deep or prolonged correction or bear market (a 20% or more pullback). Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

Stocks in China gained as the government’s recent market stabilization measures lifted investor confidence despite an uncertain economic outlook. The Shanghai Composite Index(SSE) rose 0.63%, while the blue chip CSI 300 added 0.2%. In Hong Kong, the benchmark Hang Seng Index gave up 1.42%(Refer to the above weekly performance table).   

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

1.    Beijing set an economic growth target of around 5% this year at the National People Congress (NPC), China’s parliament, which started March 5 and ends March 11. The target was the same as last year, when China’s economy officially rose 5.2%. 

2.    The government set the budget deficit at around 3%—the same target as early last year until it was subsequently raised to 3.8% to accommodate more borrowing—and said it would issue RMB 1 trillion in special ultra-long central government bonds to support growth. 

3.    At the NPC, Premier Li Qiang announced that China will refine housing policies and construct government-subsidized housing to support the property sector, which is mired in a prolonged downturn. 

4.    On the economic front, the private Caixin/S&P Global survey of services activity fell to a weaker-than-expected 52.5 in February from January 52.7. 

5.    Chinese exports and imports rose in the first two months of the year. Exports grew an above-consensus 7.1% in January and February from the prior-year period, improving from December’s 2.3% increase. Imports rose 3.5% over the two-month period, greater than the 0.2% gain in December. China combines trade data for the first two months of the year to smooth out distortions arising from the weeklong Chinese New Year holiday.

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index rose modestly, added 0.36% after previous two-week retreat, the index cycled down to its 4-week low near 3100 and bounced off a bit. It appears the index has been sideway trading within its 4-week range 3100-3250 levels.

Changes to STI index stocks after Mar review: Frasers Centrepoint Trust has been added to the STI and Emperador has been removed from the index. All changes will take effect on 18 March 2024.

Top weekly gains: DFI+3.38%; YZJ Ship +2.79%;

Top weekly losers: Seatrium-4.21%; SATS -3.76%

STI weekly chart

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