4200 Club
Stock indices rose last week on renewed hopes of a debt ceiling compromise. Investors had been more optimistic on Thursday after House Speaker Kevin McCarthy said a House of Representatives vote on a debt ceiling deal could come as soon as this week. The debt ceiling remains a concern to most market watchers as Treasury Secretary Janet Yellen warned that without a deal to raise the borrowing limit, the US government may be unable to pay its bills on time by June 1.
Even so, the S&P 500 index rose +1.6% last week bringing the YTD return to close to +10%. The gains were once again led by the technology, communication services and consumer discretionary sectors bringing the index to a fresh 2023 high of close to 4200. The S&P 500 reached an intraday high of 4,212 last week. Its highest level of 2023. However, the index ended Friday’s session down -0.1% as worries about the debt ceiling resumed due to the pause in negotiations.
Sector wise, last week was a continuation of 2023 dynamics with large cap technology stocks leading the way. Technology had the largest percentage increase of the week, up +4.2%, followed by a +3.1% rise in communication services, and a +2.6% gain in consumer discretionary. Other positive groups included financials, industrials, energy and materials. Falling sectors were much the same as YTD 2023 laggards. The utilities sector led to the downside with a -4.4% drop, followed by a -2.4% decline in real estate, a -1.7% slip in consumer staples and a -0.7% drop in health care.
Technology gains included Applied Materials (AMAT), which rose +9.4% on the week. AMAT reported fiscal 2q23 EPS and revenue above the year-earlier quarter and analysts’ mean estimates. Applied Materials also forecast fiscal Q3 net sales above the Street view at the time the guidance was released. Semi equipment stocks are anticipating a peak in semiconductor inventory and an uptick in global equipment orders in the 2h23 to move away from global reliance on Taiwan sourced products.
In communication services, video game publisher Take-Two Interactive Software (TTWO) shares gained +9.7% as they gave a strong outlook in anticipation of a new Grand Theft Auto release in FY2025.
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