SgTraderClub Weekly Stocks Updates: Dow Ends Above 40,000 to Cap Firm Week for Stocks

Sunday, May 19, 2024

Dow Ends Above 40,000 to Cap Firm Week for Stocks

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Table of Content:

1. Major indexes weekly performance

2. S&P 500 sector index weekly performance

3. Major indexes weekly chart and technical support & resistance levels

U.S.

For the week ended May 17, the U.S stock market reached a new all-time high. The Dow(DJI) reached a new summit, briefly touching 40,000, thanks to a better-than-expected inflation report. S&P 500 Index(SPX), and Nasdaq Composite(COMP) climbed to record highs in the week as well. The indexes posted their fourth consecutive weekly advances after signs of cooler inflation boosted hopes for rate cuts. Refer to below major indexes weekly performance table.

Key highlights for the week and next:

1. Inflation report. The major factor supporting sentiment appeared to be Wednesday’s release of the April consumer price index (CPI). Headline prices rose 0.3% in April, a tick below expectations, while core (less food and energy) prices rose 0.3%, as expected.

2. Interest rate. Long-term U.S. Treasury yields fall on growth and inflation news. The downside inflation and growth surprises helped drive the yield on the benchmark 10-year U.S. Treasury note to its lowest level in over a month at midweek.

SPX sectors in play

All the 11 sectors but one of SPX closed with gains. Technology(XLK) and Real Estate(XLRE) outperformed this week, Industrials(XLI) lagged. While a good portion of the market's ascent since 2022 has been powered by the prolific gains in the technology sector (and the so-called "Magnificent 7" and enthusiasm around AI in particular), leadership has begun to broaden more recently, which is viewed as a positive sign for the longevity of this bull market. Leadership is seen in recent weeks come from cyclical areas, like industrials(XLI) and financials(XLF), as well as more defensive and rate-sensitive areas, like utilities(XLU). Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

All three indexes reached record highs during the week. Click below three indexes for their weekly charts.

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks were little changed after the central government unveiled on Friday a historic rescue package to stabilize the country’s ailing property sector. The Shanghai Composite Index(SSE) was broadly flat, while the blue chip CSI 300 added 0.32%. In Hong Kong, the benchmark Hang Seng Index added 3.11%. (Refer to the above weekly performance table).

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

1. The People’s Bank of China (PBOC) lowered the minimum down payment ratio by 5% to 15% for first-time buyers and to 25% for second home purchases in an attempt to ignite demand. The PBOC also said that it would scrap the nationwide floor level of mortgage rates and allow cities to make their own decisions on what mortgage rates to charge.

2. The unprecedented support package came as data showed no sign of turnaround in China’s yearslong housing crisis. New home prices in China fell by 0.6% month on month in April, according to the statistics bureau, marking the 10th straight monthly decline and the steepest drop since November 2014.

3. Inflation data showed that deflationary pressure continued to weigh on China’s economy. China’s consumer price index rose 0.3% in April from a year ago, accelerating from March’s 0.1% increase and marking the third consecutive positive reading. However, the producer price index fell 2.5% from a year ago compared with a 2.8% drop in March.

Hang Seng Index component stocks weekly return: