The market was mixed in the past week with the S&P 500 (+0.1%) and Nasdaq Composite (+0.1%) barely in positive territory, while the DJIA (-0.2%) ended modestly lower. The broader market deteriorated considerably as the week progressed, with the Russell 2000 (-2.4%) and S&P Mid Cap 400 (-2.4%) posting steep losses amid renewed pressure on economically and rate sensitive areas of the market.
Hotter-than-expected CPI and PPI reports reinforced concerns that inflation remains stubbornly elevated, while renewed geopolitical tensions surrounding Iran pushed crude oil prices sharply higher by week’s end. Treasury yields climbed steadily throughout the week as investors continued to scale back expectations for Fed rate cuts and increasingly entertain the possibility that the Fed could remain on hold well into next year.
Technology stocks once again was a bright spot. The technology sector rose 1.2%, while the semiconductor index surged 11.1% higher fueled by continued enthusiasm for AI. The Vanguard Mega Cap Growth ETF climbed 4.0%, significantly outperforming the broader market, while the equal-weighted indices lagged notably throughout the week. Software stocks also displayed relative resilience, with the iShares Expanded Tech-Software ETF advancing 0.7%. The energy sector (+6.8%) was the clear outperformer as crude oil prices surged amid renewed fears surrounding the U.S.-Iran conflict and potential disruptions tied to the Strait of Hormuz
Meanwhile, several economically sensitive groups struggled under the pressure of rising yields and higher oil prices. The consumer discretionary sector fell 3.1%, real estate dropped 2.6%, materials lost 2.3%, and utilities declined 2.1%. Homebuilders were particularly weak as higher Treasury yields pressured housing affordability, sending the iShares U.S. Home Construction ETF tumbling 7.0% for the week.