USA
The S&P 500 Index and most other major benchmarks managed to snap a string of three weekly losses. Analysts polled by FactSet expected overall earnings for the S&P 500 to have increased 3.7% in the first quarter. The technology-heavy Nasdaq Composite Index performed best, aided by strength in Apple and NVIDIA. Conversely, Facebook parent Meta Platforms fell sharply after CEO Mark Zuckerberg announced plans to continue heavy spending on new technologies.
The week started strong, with investors capitalizing on recent declines in the tech sector and short covering. Economic data showed downside surprises, interpreted as good news for markets due to reduced pressure on inflation and interest rates. However, Thursday brought bad economic news as the economy expanded at a slower pace than expected in the first quarter.
Inflation data raised concerns about stagflation, with the core PCE index rising more than expected. Friday’s rebound in stocks was attributed to better news on the inflation front, with core PCE inflation continuing to decline slightly in March.
Europe
The pan-European STOXX Europe 600 Index ended higher after a three-week losing streak. Germany’s DAX, France’s CAC 40 Index, Italy’s FTSE MIB, and the UK’s FTSE 100 Index also advanced.
European government bond yields hit their highest levels this year, with expectations that the Federal Reserve would keep interest rates higher for longer. Numerous European Central Bank policymakers signaled a potential interest rate cut in June, although comments by hawks cast doubt on subsequent reductions.
Business activity in the eurozone and Germany showed signs of improvement in April. The UK’s composite PMI rose, but weakening demand squeezed business margins.
China
Chinese stocks rose as optimism about the economy grew. The Shanghai Composite Index gained 0.76%, while the blue chip CSI 300 added 1.2%. China’s gross domestic product grew by 5.3% in the first quarter, exceeding expectations. However, economists downgraded their inflation forecasts due to declining producer prices and a sluggish property market. Chinese banks kept their loan prime rates unchanged, signaling cautiousness about monetary easing. Investor sentiment remained positive, despite concerns about economic challenges.
Japan
Japan’s stock markets gained, with both the Nikkei 225 Index and the broader TOPIX Index returning 2.3%. The Bank of Japan refrained from changes to its monetary policy, but Governor Kazuo Ueda hinted at potential interest rate increases in the second half of the year.
The yen continued to weaken against the USD, prompting speculation about intervention. Inflationary pressures eased slightly, and private sector activity showed signs of expansion.
| Index | Friday’s Close | Week’s Change | % Change YTD |
| DJIA | 38,239.66 | 253.26 | 1.46% |
| S&P 500 | 5,099.96 | 132.73 | 6.92% |
| Nasdaq Composite | 15,927.90 | 645.89 | 6.11% |
| S&P MidCap 400 | 2,895.25 | 58.37 | 4.09% |
| Russell 2000 | 2,002.00 | 54.34 | -1.24% |
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