Weekly Market Report: Feb 20, 2024

Weekly Market Report: Feb 20, 2024


Benchmarks mixed as small-caps and value shares outperform. Some favorable earnings surprises balanced against discouraging inflation data left the major benchmarks mixed, with the S&P 500 Index recording its first weekly decline since the start of the year. The declines were concentrated in large-cap growth stocks, however, with an equally weighted version of the S&P 500 reaching a record intraday high on Thursday. After suffering its biggest daily drop since June on Tuesday, the small-cap Russell 2000 Index rebounded to lead the gains for the week. Investors digested several upside inflation surprises during the week. On Tuesday, the major indexes sold off after the Labor Department reported that consumer prices had risen 0.3% in January, a tick above consensus expectations of around 0.2%. More concerning may have been the 0.4% rise in core consumer prices, keeping the year-over-year rise at 3.9%, nearly double the Federal Reserve’s 2.0% target. Stocks regained some momentum on Wednesday, after Chicago Fed President Austan Goolsbee told conferencegoers in New York that slightly higher inflation over the coming months was still consistent with the path back to the Fed’s 2% inflation target.


STOXX Europe 600 Index ended the week 1.39% higher as signs of cooling inflation and a better outlook for interest rate cuts cheered investors. Germany’s DAX gained 1.13%, and France’s CAC 40 Index advanced 1.58% on upbeat corporate earnings, hitting new highs during the week. Italy’s FTSE MIB climbed 1.85%. The UK’s FTSE 100 Index added 1.84%.

Core eurozone government bond yields rose modestly after the higher-than-expected U.S. inflation print. European Central Bank President Christine Lagarde expressed concern over “making a hasty decision” to ease policy in case inflation rebounds, adding to the upward pressure on short-dated bond yields. Peripheral eurozone bond yields fell, however, particularly those of longer-dated Italian debt.


Japan’s stock markets rose over the week, with the Nikkei 225 Index gaining 4.3% and the broader TOPIX Index up 2.6%. The Nikkei hovered around its highest level in 34 years, continuing its strong performance in the year-to-date period and in 2023. Yen weakness and positive corporate earnings releases lent support. On the economic front, weak fourth-quarter growth data added to uncertainty about the future path of the Bank of Japan’s monetary policy, which the central bank deems dependent on sustainably achieving its 2% inflation target.

The yield on the 10-year Japanese government bond finished the week broadly unchanged at 0.73%, as investors digested the latest U.S. economic data, including inflation prints, and their likely impact on the timing of any potential Federal Reserve rate cuts.


Financial markets in mainland China were closed, and no official indicators were released due to the weeklong Lunar New Year holiday, which began Saturday, February 10. Early data showed a pickup in consumer spending over the Lunar New Year, China’s most important holiday. More than 61 million rail trips were made in the first six days of the national holiday, a 61% increase over last year’s holiday, according to official media reported by Bloomberg. However, analysts cautioned that the year-over-year consumption surge was less impressive considering that China was battling nationwide coronavirus outbreaks in early 2023 after Beijing rolled back pandemic restrictions in December 2022.


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