Speed Bump In The Rearview

Equities Report 3

Despite challenges from Senate hearings on social media, an unmoving Fed and some misses on lofty expectations from earnings season, the S&P 500 and Nasdaq have emerged largely unscathed posting solid weekly gains of 1.38% and 1.12%, respectively, with both indices showing significant growth over the one-month and three-month periods.

The Russell 2000 diverged notably with a weekly decline of 0.79%. Investment style-focused equities reveal an inclination towards Growth, Momentum and Quality as Value continues to lag its counterparts. Momentum and Quality stocks are up 2.22% and 1.95% over the week, respectively, reinforcing the trend where investors are rewarding well-performing stocks and those with strong fundamentals. Over three months, Momentum stocks have seen a remarkable increase of 16.08%, and Quality stocks have risen by 14.33%.

The VIX, a measure of market volatility, has seen a substantial weekly uptick of 4.45%, which contrasts with a decrease of 6.98% over the past three months. This could signal a recent rise in market uncertainty or investor caution despite the ongoing positive momentum as the Fed once again took center stage.

Sector-specific performance has been varied. Consumer Discretionary and Consumer Staples have both seen weekly gains over 2%, with notable three-month increases of 10.74% and 8.53%, respectively. This could indicate a strong consumer sector, buoyed by spending and economic optimism.

Health Care and Communication Services sectors have also shown strong weekly performance with gains of 1.95% and 2.65%, respectively, again outperforming over the three-month period with increases of 11.2% and 18.64%. In contrast, Energy and Real Estate sectors have experienced slight weekly declines, though their three-month trend remains positive.

Global market trends are mixed, with Developed Markets showing a modest weekly gain of 0.23%, while Emerging Markets have declined by 1.32% over the same period.

In summary, the equities market as we enter February, 2024 is characterized by a clear preference for growth and quality, with large-cap stocks leading the charge. The market's positive momentum is tempered by a recent spike in volatility, and while most sectors are thriving, there is a notable caution in Energy and Real Estate, potentially reflecting sector-specific headwinds or broader economic considerations.

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