Mega-caps lead the rally - Creand
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Mega-caps lead the rally

The Vanguard Mega Cap Growth ETF (MGK) jumped 3.4% this week versus a 1.3% gain in the S&P 500, which closed above the 4,400 level on Friday. The S&P 500 is now up 7.2% from its low close on October 27.  The Invesco S&P 500 Equal Weight ETF (RSP), meanwhile, declined by 0.6% this week.  Small and mid-cap stocks were an exception, relenting to some selling pressure this week. The Russell 2000 fell 3.2% and the S&P Mid Cap 400 declined 1.6%.

This divergence within the market could also be seen within the S&P sectors with only six of the 11 sectors rising this week. The sectors containing the Mega-Cap stocks were the best performers with technology gaining 4.8%, communication services up 2.2% followed by consumer discretionary rising 0.9%. The energy (-3.8%), utilities (-2.6%), and real estate (-2.1%) sectors saw the biggest declines.

There were several Fed officials speaking this week, but the market was mostly focused on Fed Chair Jerome Powell’s IMF panel discussion on Thursday. Mr. Powell largely reiterated his remarks from November 1, saying “If it becomes appropriate to tighten policy further, we will not hesitate to do so.”

There was somewhat of a pullback on Thursday.  The market took a sharp turn lower and Treasury yields turned higher immediately after results from Thursday’s $24 billion 30-yr bond auction showed much weaker demand than sales of 3- and 10-yr notes.  The selling continued into Powell’s speech. 

However, the market closed out the week on a strong note with the Nasdaq gaining over 2% on Friday.  The rally was led by the semiconductor stocks with the SOXX gaining 4% on the day.  The move in semiconductors was sparked by a positive sales update from Taiwan Semiconductor (TSM).