The stock market closed out another positive week with the S&P 500 and Dow Jones record highs. The Russell 2000 (1.9%) was the leading index, the S&P 500 settled 0.9% higher, the Nasdaq Composite jumped 0.8%, and the Dow Jones rose 1.0%. Gains were relatively broad based as the equal-weighted S&P 500 gained 1.1%.
The financial sector was a top performer as investors digested quarterly reports from the space. Morgan Stanley (MS) and Goldman Sachs (GS) were some of the standouts in that respect. Health care was one of two sectors to close lower last week as shares of UnitedHealth (UNH) suffered a sharp decline after reporting its third quarter earnings, which featured an increase in its medical care ratio, and issuing disappointing guidance. The only other sector to log a decline was energy (-2.6%), which was reacting to a drop in oil prices. WTI crude oil ended the week at $68.62 per barrel.
Semiconductor stocks were another area of weakness. The PHLX Semiconductor Index (SOX) dropped 2.4% last week in response to a Bloomberg report that the Biden administration is looking at curbing sales of advanced AI chips to certain countries, with a focus on Persian Gulf countries, and in response to ASML’s (ASML) third quarter results. The semiconductor equipment maker’s results were released accidentally and were a major disappointment to investors due to below-consensus EPS, revenues, and net bookings. More importantly, the company issued guidance that was substantially weaker than analysts had been expecting. In contrast, Taiwan Semiconductor Manufacturing Company (TSM) reported better than expected results and guidance, which stirred some buy-the-dip interest in the semiconductor space towards the end of the week.
Finally, investors were weighing the notion that the Fed won’t be as aggressive cutting interest rates as previously thought after some solid economic data. These reports included September retail sales, which were stronger than expected, and initial jobless claims, which were not as bad as feared.