Stocks Rally on Fed Rate-cut Hopes

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Table of Content:

1.    Major indexes weekly performance 

2.    Major indexes monthly performance for April 

3.    S&P 500 sector index weekly performance 

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

U.S.

For the week ended May 3, U.S major indexes ended higher following a volatile week featuring a raft of economic and earnings data. Latest reported nonfarm payroll less than expected, and easing wage growth, bolstering investors' confidence the Federal Reserve will eventually lower interest rates. The S&P 500 index (SPX) and the Nasdaq Composite ($COMP) both ended at three-week highs. Refer to below major indexes weekly and monthly performance table. 

Index Monthly performance for April:

Key highlights for the week and next:

1.    Nonfarm payrolls reported on Friday increased 175k during April, down from an upwardly revised 315k in March and the smallest monthly increase since last October. Payrolls fell short of expectations for a gain of about 250,000. 

2.    On Friday, the Institute for Supply Management reported that its gauge of services sector activity had fallen back into contraction territory for the first time since December 2022. 

3.    Fed two-day policy meeting concluded in the week stated policymakers were not cut rates—and rates were left steady at the meeting, as was widely expected—neither did they see the need to increase rates given the “sufficiently restrictive” current stance of monetary policy. 

4.   Corporate earnings. It was the second-busiest week of first-quarter earnings reports, Apple’s earnings beat market forecast and seemed to help drive a rebound in overall sentiment. Also announced to buy back USD 110 billion of its own shares, the largest such repurchase in history. Another notable mover for the week was Tesla, which surged over 15% on Monday after founder Elon Musk made a surprise appearance in China following news of the government’s tentative approval of the self-driving technology the company has under development.

SPX sectors in play

For the week, Nine out of the 11 sectors of SPX closed positive. Utilities(XLU) and Real Estate(XLRE) outperformed. Technology(XLK) and Consumer Discretionary(XLY) also among top gainers. Financials( XLF) and Energy(XLE) lagged. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

SPX and COMP indexes both ended 2^nd consecutive week up while Dow ended 3^rd weekly gains in a row. All three major indexes weekly uptrend seem well intact.  Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks rose in a holiday-shortened week on hopes that the government will ramp up support. The Shanghai Composite Index(SSE) gained 0.52%, while the blue chip CSI 300 added 0.56%. In Hong Kong, the benchmark Hang Seng Index added 4.67%. Markets in mainland China were closed from Wednesday for the Labor Day Holiday and will reopen on Monday, May 6. Hong Kong markets were closed Wednesday but reopened Thursday. (Refer to the above weekly performance table).

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

1.    China’s top decision-making body, the 24-member Politburo, pledged to implement prudent monetary and fiscal support to shore up demand at its April meeting last Tuesday. Officials stated that China would make flexible use of monetary policy tools to restore growth, including possible cuts to interest rates and the reserve requirement ratio, which sets the amount of cash that banks must set aside in reserve. 

2.    Official PMI was a better-than-expected reading of 50.4 in April, down from March’s 50.8, marking the second straight monthly expansion. The nonmanufacturing PMI reached a below-consensus 51.2, easing from 53 in March, as new orders and services activity stalled from the prior month. Separately, the private Caixin/S&P Global survey of manufacturing activity edged up to a better-than-expected 51.4 in April, marking its 16th month of expansion.

Hang Seng Index component stocks weekly return:

Click below title to view weekly charts.

SSE weekly chart

.HSI weekly chart

Singapore

STI index ended its 2^nd weekly gains, reaching new highs since Aug last year. Banks such as DBS were among top gainers of the week, pushing the index higher, next major resistance level is around 3400 previous highs. Immediate technical support 3250 level.

STI Index component stocks weekly return:

STI weekly chart

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