S&P500: 4300

The S&P500 closed last week at a 12-month recovery high of 4,282, up from the prior Friday’s closing level of 4,205. The S&P 500 rose +1.8% to end the week stretching its YTD gain to 11.5%. 10-year Treasury yields fell 11 bps.  All sectors gained for the week, led by consumer discretionary and real estate, both up by more than 3% each. Last week’s passage of the debt ceiling deal was the early excuse de jure.  Friday’s strong payrolls growth (339,000 but albeit overstated), a moderation in wage gains, and higher jobless rate driven by workers returning to the workforce, drove a strong Friday rally in stocks.

Stock volatility fell to its lowest level since pre-pandemic and corporate credit spreads narrowed last week.   Both positive things for stocks short-term. The herd of previously bearish strategists grew quieter or shrunk last week.  Those always bearish ones resorted to pushing out their “recession forthcoming” or “retest the lows” calls. Breadth last Friday exploded upward on a daily basis with the NYSE advance/decline ratio reaching 5.6x.

Over the weekend, in an effort to prop up declining oil prices, Saudi Arabia said it would reduce its output by an additional 1 million barrels per day (around 10%) starting in July and re-assess the need for further cuts on a monthly basis.  Oil prices have jumped back to around $73 on this news.

Consumer discretionary stocks rose over 3% led by a nearly 11% gain in Tesla (TSLA) shares. Tesla’s billionaire Chief Executive Elon Musk made his first visit to China in almost three years in an effort to expand the company’s business in the country.  Technology stocks advanced +1.4% led by Nvidia (NVDA) and its artificial intelligence-focused product announcements. The chipmaker’s market capitalization hit $1 trillion last Tuesday.

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