Weekly: S&P 500 recorded the strongest week, FOMC highlight the week ahead

Last Week's Recap

The US Market - S&P 500 recorded the strongest week of 2024

• The S&P 500 and the Nasdaq posted their strongest week of 2024 ahead of the upcoming Federal Reserve meeting.

• The benchmark gained 4% for the week as a moderation in inflation supported the case for a rate cut with rate-sensitive small cap stocks outperforming.

• The consumer price index in August came in at 2.5% on an annualized basis, the lowest level since February 2021. Producer price index (PPI) presented a more benign picture, lowering the 12-month wholesale inflation rate to 1.7%.

• Bets on the size of the Fed's cut have been volatile and were roughly even by late Friday. Expectations for a 50 basis point cut jumped to 49% from 28% on Thursday, according to CME's FedWatch Tool, which showed a 51% probability for a 25 basis point cut.

The US Sectors & Stocks - Tech stocks surged

• All S&P 500 sectors closed the week in the green. Investors continued to rake up shares of megacap tech and semiconductor names, which helped drive the technology sector's rebound rally with a 7.18% gain.

• Semiconductor stocks rallied this week to help boost the Nasdaq-100 index to a nearly 6% weekly gain. Arm Holdings (ARM) was the biggest gainer in the concentrated index, surging more than 26%, while Broadcom (AVGO) jumped about 21%. Nvidia (NVDA) rallied 16% and Super Micro Computer (SMCI) popped about 19%.

• Utilities, communications services and industrials sectors reached 52-week highs Friday. While real estate stocks remained about 13% below their record close set in December 2021, shortly before the Federal Reserve began tightening monetary policy in early 2022.

• Notable gainers among consumer defensive include Walmart (WMT), which rallied to an all-time high, bringing its one-week advance to 5.2%, and its market-beating year-to-date gain to more than 53%. While Costco (CSCO) surged 38% year-to-date.

• Apple (AAPL) introduced its AI-related iPhone 16 smartphones, along with new Apple Watch smartwatches and AirPods earbuds. However, hardware news largely leaked ahead of the event. Apple stock closed the week with a 0.76% gain, lagging the benchmark.

• Nvidia (NVDA) CEO Jensen Huang, speaking at Goldman Sachs' conference, said demand for the company's AI processors for data centers remains "incredible." Jensen noted that Nvidia is struggling to keep up with orders. He said production of its next-generation chips, named Blackwell, is ramping now and is in full production.

• Adobe (ADBE) beat fiscal third-quarter estimates. But the software firm forecast adjusted EPS up 9% and revenue up 10%, both slightly below expectations for the current quarter. Adobe shares tumbled.

• Oracle (ORCL) 's fiscal Q1 earnings showed stronger-than-expected sales growth and earnings. The database software giant also announced a new partnership with Amazon Web Services. Helped by AI-related cloud demand, Oracle projects $104 billion in revenue in fiscal 2029, implying a 16% compound annual growth rate. Oracle stock jumped 14% this week.

• Warnings from Dow components JPMorgan Chase (JPM), Goldman Sachs (GS), as well as auto lending giant Ally Financial (ALLY), hit banks and lenders. JPMorgan President Daniel Pinto said 2025 net interest income "will be lower" than analyst forecasts for $90 billion. Goldman Sachs said Q3 trading revenue fell 10% vs. a year earlier. Ally CFO Russell Hutchinson said, "Our borrower is struggling with high inflation and cost of living, and now more recently, a weakening employment picture." Ally's warning also hit auto dealers and some automakers.

Hong Kong Market - HSI fell 0.46%

• Hong Kong stocks narrowed the week’s loss following speculations that China may cut mortgage rates as early as the current month. The Hang Seng Index (HSI) fell 0.46% to 17,369.09.

• China could cut rates on outstanding mortgages by up to 50 basis points as early as this month to lower borrowing costs and spur consumption, Bloomberg reported on Friday, citing unnamed sources.

• Another Bloomberg report, with citation to unnamed sources, encouraged a rise in China's property shares after it reported that China may be inclined to cut interest rates on more than $5 trillion of outstanding mortgages this month, splurging the Hong Kong's Hang Seng mainland properties index.

• Alibaba (9988.HK/BABA) rose 3.7% last week. Onshore investors were net buyers of HK$11.6 billion (US$1.49 billion) worth of its shares since Tuesday, when it became an eligible component of the Stock Connect scheme.

Singapore Market -STI rose to a 52-week high

• Singapore's stocks rose this week, further improving on a 52-week high, mirroring gains in Wall Street. The Straits Times Index (STI) rose 3.13% to 3562.65 this week, extending a 5-week winning run.

• Economists have upgraded their expectations for Singapore's growth to 2.6% this year, with better-than-expected external growth seen as the top upside driver for the economy.

• Singapore is forecast to have the largest share of passenger electric vehicles (EVs) in South-east Asia by 2040, according to BloombergNEF. A total of 80 per cent of all passenger vehicles here are expected to be electric by that year, compared with a regional average of 24%.

• Singapore will start construction of a new mega terminal at Changi Airport in the first half of 2025, aiming to lift the aviation hub’s annual passenger handling capacity by more than half.

The Week Ahead

Macro Factors - FOMC highlight the week

• A highly anticipated interest-rate decision by the Federal Reserve will be this week's highlight.

• Policymakers have signaled they will cut rates at the Fed's September meeting, which ends on Wednesday afternoon. There remains uncertainty about whether the cut will be by a quarter of a percentage point or by a half point. Officials will also present updated economic and rate projections for the coming years.

• On Tuesday, the Census Bureau will report retail sales data for August. Those are forecast to be relatively unchanged during the month. On Friday morning, the Bank of Japan is expected to keep its benchmark interest rate target unchanged at 0.25%.

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