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Kevin Matras   
Profit from the Pros
By Kevin Matras
Executive Vice President
Zacks Investment Research

S&P And Nasdaq Closed Higher Last Week, 5th Week In A Row For Nasdaq

Stocks closed sharply higher on Friday with the Dow up 1.00%, the S&P up 1.30%, and the Nasdaq leading the way, once again, with 2.19%.

For the week, the Dow was not able to get above the zero line. But the S&P closed higher for the week with a gain of 0.32%, making it 2 up weeks in a row. And the tech-heavy Nasdaq closed higher for the week with a gain of 2.51%, making it 5 up weeks in a row.

The Nasdaq, obviously, has been doing well for weeks. But last week's blowout earnings and guidance by Nvidia, and then Marvell Technology, ignited the rallies in both the Nasdaq and the S&P as well.

If it wasn't clear before, their earnings showed just how transformative the generative AI space is going to be. As more and more companies utilize AI (whether it be producing the components to run AI, or selling the products that use AI), this is going to be a multi-trillion dollar industry, and will change the world as we know it, much like the home computer and the commercialization of the internet did.

Friday's Personal Consumption Expenditures (PCE) index did not follow the inflation trajectory of the lower CPI and PPI numbers from a couple weeks earlier. Instead, the headline PCE gained 0.4% w/w vs. the 0.3% that was expected. And y/y it was up 4.4% vs. last month's 4.2% and views for 4.3%. The core rate (ex-food & energy) was up 0.4% w/w vs. last month's 0.3% pace and views for the same. On a y/y basis it came in at 4.7% vs. last month's 4.6% and the consensus for 4.6% as well.

For context, core PCE inflation is still down from last year's peak of 5.3%.

But the latest increase didn't go without notice. And it's prompted speculation that the Fed could very well make one more 25 basis point increase come their next meeting on June 13-14. But, for now, the consensus is still that the Fed hits pause at their next meeting. We shall see.

But inflation talk was clearly overshadowed by the excitement of Marvell's 32% gain on Friday, not to mention Nvidia's 2.50% gain on Friday, following their 24% gain the day before.

As for the debt ceiling, everybody got a little more breathing room on Friday after the close when Treasury Secretary, Janet Yellen, said that the deadline for when the Treasury will run out of money, can get pushed out to June 5 from the previous X date of June 1.

And then over the weekend, we learned that a deal was made. Although, it still has to be voted on. The vote could take place as early as today.

In other news, Friday's Durable Goods Orders report showed new orders up 1.1% m/m vs. the consensus for -1.1%. Ex-transportation it was down -0.2% vs. estimates for -0.1%. Core capital goods were up 1.4%, which was a nice improvement from last month's -0.6%.

Retail Inventories rose 0.2% m/m, while wholesale inventories slipped -0.2% m/m.

And Consumer Sentiment increased by 2.60% last month with the index coming in at 59.2 vs. last month's 57.7 and estimates for 58.0.

Last week was an exciting week. And the S&P and Nasdaq both closed at new YTD highs.

If all goes well this week, with the debt ceiling vote likely today or tomorrow, and the always important Employment Situation report on Friday, we could see those gains extended even further.

See you tomorrow,

Kevin Matras

Executive Vice President, Zacks Investment Research


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