U.S Stocks Managed to Recover Most of Their Losses In A Tumultuous Week

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Main Content:

1.    Major indexes weekly performance 

2.    U.S stocks weekly wrap 

3.    S&P 500 sector index weekly performance 

4.    China/Hong Kong stocks weekly wrap 

5.    Singapore stocks weekly wrap 

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

U.S.

For the week ended Aug 9, major U.S. indexes closed modestly lower after recovering from the biggest sell-off in nearly two years. The S&P 500 Index(SPX) neared correction territory (down over 10%) on Monday, when it fell as much as 9.71% from its intraday high in mid-January; around the same time, the Nasdaq Composite (COMP) was down 15.81% from its peak, after entering a correction the previous Friday. Even more pronounced were the swings in the CBOE Volatility Index (VIX), Wall Street’s so-called fear gauge, which briefly spiked Monday to 65.73, its highest level since late March 2020, before falling back to end the week at 20.69.

The proximate cause was an overnight plunge in Japan's Nikkei 225 index—triggered by a strengthening yen and concerns about U.S. economic growth—which spread across Asia and Europe as trading started for the week.Refer to below major indexes weekly performanc table.

Key highlights for the week and next:

1.    On Monday, the Dow Jones index shed 1,034 points, the 12th-largest single-day point decline on record. Historically, there have been 25 total daily moves in the Dow of more than 1,000 points, 14 down and 11 up. While the size is eye-catching, keep in mind that last Monday's 1,034-point move was a decline of 2.6%. The similar 1,033-point drop on February 8, 2018, was a 4.2% move. 

2.    The 3% decline in the S&P 500 on Monday captured significant attention, putting the S&P 500 just 8% off of its all-time high. But the stock market is still up nearly 20% over last year and 50% since this bull market began in October of 2022. 

3.    In fact, over the last quarter-century, there were an average of about three times a 5%-plus decline per year. Over the last several decades, on average, we've experienced roughly one 10% correction per year. 

4.    A reassuring drop in weekly jobless claims on Thursday seemed partly responsible for a bounce-back rally, with the S&P 500 scoring its best daily gain since November 2022. Weekly claims fell to 233k from an upwardly revised 250k. 

5.    Investors are now pricing in nearly 52% odds the Federal Reserve will cut its benchmark rate by half a percentage point when its rate-setting body meets next month, according to the CME FedWatch Tool. As recently as late July, investors were nearly unanimous the Fed would opt for a smaller quarter-point cut.  

6.    What’s in focus: The latest inflation report coming this week (Wednesday, 8/14), as well as ongoing election and geopolitical anxieties, represent additional catalysts for volatility.

 

SPX sectors in play

Five out of the 11 sectors of SPX closed with gains for the week. Defensive names were among top gainers but market leadership seems broaden out to all sectors from the narrowed mega-tech names previously. Refer to below SPX sectors ETF weekly performance table.

Indexes technical levels

The major indexes managed to recover most of their losses to close out a tumultuous week. DJI index ended 2^nd weekly decline, Nasdaq(COMP) and SPX closed with 4^th weekly decline. Click below three indexes for their weekly charts.  

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

China/HK

China stocks retreated as a stronger-than-expected increase in consumer prices failed to offset concerns about deflationary pressures. The Shanghai Composite Index(SSE) fell 1.48% and the blue chip CSI 300 gave up 1.56%. In Hong Kong, the benchmark Hang Seng Index gained 0.85%. (Refer to the above weekly performance table).

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

1.    China’s consumer price index rose 0.5% in July from a year earlier, from June’s 0.2% rise. Analysts attributed the increase to seasonal factors, such as bad weather conditions and a low base for pork prices in 2023. Core inflation rose 0.4%, narrowing from 0.6% in June and marking the lowest growth since January, according to Bloomberg. The producer price index fell 0.8% from a year ago, unchanged from June and marking its 22nd month of decline. 

2.    Separately, the private Caixin/S&P Global survey of services activity edged up to a better-than-forecast 52.1 in July from 51.2 in June, marking its 19th straight month of expansion, according to Reuters. However, the Caixin composite purchasing managers’ index (PMI) softened to 51.2 from 52.8 in June as the Caixin manufacturing PMI unexpectedly contracted for the first time in nine months the prior week. The mixed PMI readings highlighted the uneven growth of China’s economy amid a prolonged property slump that has hit domestic consumption even as manufacturing and exports have showed strength. 

3.   Imports exceeded forecasts in July, rising 7.2% from a year earlier, up from a 2.3% decline in June. Exports rose a lower-than-expected 7% in July due to sluggish demand. The overall trade surplus was USD 84.65 billion, down from USD 99.05 billion in June. The decline in exports raised concerns about softening global demand, which has been key for China’s economy this year, and helped compensate for sluggish domestic demand.

SSE weekly chart

.HSI weekly chart

Singapore

STI index declined 4^th week in a row, with 3.54% down this week. The index plunged below its 200dma(3225 point) intra-week and recovered and closed above it.

Refer to below index stocks weekly performance.

Click below for STI weekly chart.

STI weekly chart

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