Market developments
Equities:
The S&P 500 reached a record high, heading towards its fifth consecutive week of gains, driven by optimism around a soft landing and excitement over artificial intelligence. Technology stocks led the surge, with the Nasdaq 100 rising and Nvidia Corp. threatening to become the fourth most valuable U.S. company. The outlook for corporate profits sustained the stock market’s strength, with earnings season surpassing expectations. Around 80% of S&P 500 companies have exceeded forecasts, prompting analysts to raise projections. Wall Street anticipates fourth-quarter earnings to grow 6.5% from the previous year, a significant increase from earlier projections.
Fixed income:
Investors were reassured by a government report showing steady inflation, which contributed to gains in bonds fueled by the expectations of rate cuts. Despite overheating concerns, analysts remain cautiously optimistic, expecting a soft landing for the U.S. economy and potential Fed rate cuts later in 2024.
Commodities:
Oil prices rose for the week due to diminishing hopes of a cease-fire in the Middle East, with Israel gearing up to strike southern Gaza, heightening geopolitical tensions. Technical indicators also suggested continued strength in oil markets. Additionally, in the U.S., the gasoline premium over crude reached its highest level since September following a decline in nationwide inventories.