PAS Weekly Commentary

Mega Caps and Semiconductor Shares Lead Declines

The stock market logged another downbeat week. The Russell 2000 fell 2.8%, the S&P 500 declined 3.1%, and the Nasdaq Composite registered a 5.5% loss.

The price-weighted Dow Jones Industrial Average settled unchanged on the week. 

With Friday's action, the S&P 500 and Nasdaq Composite saw their sixth consecutive loss. Ongoing weakness in mega cap stocks and semiconductor shares, which have led the market higher so far this year, had a disproportionate impact on index performance.

ASML and TSMC were standout losers in the SOX, declining 10.6% and 10.4%, respectively, this week after reporting quarterly results. ASML reported weaker-than-expected Q1 bookings and TSMC reported better than expected earnings, but warned that the chip industry is enduring a more gradual recovery than expected.

NVIDIA was another top laggard from the space, dropping 13.6% on no specific news. Shares of NVDA are still 53.9% higher since the start of 2024.

Some of the sessions this week featured buy-the-dip action at the open that faded as the session progressed. The lack of strong conviction from buyers became its own downside catalyst and many stocks settled lower this week. The equal-weighted S&P 500 logged a 1.3% decline. 

The downside bias in stocks was also related to rising interest rates with Fed officials suggesting they are in no hurry to cut rates because recent inflation reports have not given them enough confidence that inflation is on a sustainable path to the 2% target.

The 2-yr note yield settled nine basis points higher at 4.97% and the 10-yr note yield settled 12 basis points higher at 4.62%. 

Geopolitical uncertainty related to events in the Middle East also contributed to the negative bias this week in equities. Israel attacked Iranian territory, though like Iran's attack over the last weekend, Israel's response did not produce significant damage.

Many stocks participated in this week's retreat. Eight of the 11 S&P 500 sectors declined. The information technology (-7.3%), consumer discretionary (-4.5%), and communication services (-3.2%) sectors logged some of the largest declines, clipped by weakness in their mega cap constituents. The rate-sensitive real estate sector was also a top laggard, falling 3.6%. 

The consumer staples (+1.4%), utilities (+1.9%), and financial (+0.8%) sectors were the only sectors that logged gains. 

  • S&P 500: -3.1% for the week / +4.1% YTD
  • S&P Midcap 400: -2.2% for the week / +2.0% YTD
  • Nasdaq Composite: -5.2% for the week / +1.8% YTD
  • Dow Jones Industrial Average: UNCH for the week / +0.8% YTD
  • Russell 2000: -2.8% for the week / -3.9% YTD

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Past performance is not a guarantee of future results. Indices are unmanaged and one cannot invest directly in an index. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Data and rates used were indicative of market conditions as of the date shown and compiled by Briefing.com. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer, or recommendation to purchase or sell a security. S&P 500 Index is a market index generally considered representative of the stock market as a whole. The index focuses on the large-cap segment of the U.S. equities market. Each company’s security affects the index in proportion to its market value. NASDAQ Composite Index is a market value-weighted index that measures all NASDAQ domestic and non-U.S. based common stocks listed on the NASDAQ stock market. Dow Jones Industrial Average is a widely used indicator of the overall condition of the stock market, a price-weighted average of 30 actively traded blue chip stocks, primarily industrials, but also includes financial, leisure and other service-oriented firms. Russell 2000 Index measures the performance of the smallest 2,000 companies in the Russell 3000 Index of the 3,000 largest U.S. companies in terms of market capitalization. MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance of emerging markets.

Park Avenue Securities LLC (PAS) is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker/dealer offering competitive investment products, as well as a registered investment advisor offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC.

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2024-173443 (Exp. 7/24)

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