The S&P 500 and Nasdaq hit fresh record highs last week and closed 1.6% and 3.2% higher, respectively. Other major indices logged declines last week, though. The Dow Jones Industrial Average declined 0.5% and the Russell 2000 fell 1.0%.
Gains in the mega cap space played an integral role in index-level gains for the S&P 500 and Nasdaq. The equal-weighted S&P 500 slid 0.5% this week while the Vanguard Mega Cap Growth ETF (MGK) jumped 3.4%. Apple (AAPL) was a significant driver of the advance in mega caps, jumping 7.9% and hitting record highs after introducing “Apple Intelligence” for the iPhone at its Worldwide Developers Conference. Broadcom (AVGO), another top performing mega cap, surged 23.4% after a better-than-expected earnings report, outlook, and a 10-for-1 stock split announcement. Another notable mega cap company, Adobe (ADBE), delivered a better than expected earnings results and guidance, gaining 12.9% last week.
The three aforementioned companies helped propel the S&P 500 information technology sector to a 6.4% gain. The next best performing sector was real estate, gaining 1.2%. On the flip side, the energy (-2.3%) and financial (-2.0%) sectors logged the biggest declines.
The May Consumer Price Index (CPI) reflected some welcome deceleration on a year-over-year basis with total CPI declining from 3.4% to 3.3% and core CPI slowing to 3.4% from 3.6%. The May Producer Price Index (PPI) showed a 0.2% month-over-month decline in total PPI while core PPI was unchanged from the prior month. Driven in part by the inflation data, the yield on the 10-yr US Treasury declined 22 basis points this week and the 2-yr note yield declined 20 basis points to 4.69%.
The Fed met last week and decided to leave the target range for interest rates unchanged at 5.25-5.50%, as expected. The directive reiterated that, “The Committee does not expect it will be appropriate to reduce the target range until it has greater confidence that inflation is moving sustainably toward 2 percent.” In a bit of a surprise, the Fed’s updated “dot plot” showed a median estimate of only one rate cut this year versus three at the time of the March projections.