S&P 500 makes a new high (just barely) - Creand
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S&P 500 makes a new high (just barely)

The major indices closed the week with modest gains.  For the S&P 500, Friday’s close at 4,604 marked an 11.8% rise off its October 27 low and set a new 52-week high for the index.  It was the Mega-caps that led the S&P 500 to a modest gain of 0.2%.  The Invesco S&P 500 Equal Weight ETF (RSP) closed almost flat for the week while the Vanguard Mega Cap Growth ETF (MGK) closed with a 0.9% gain. Alphabet (GOOG) was a standout from within the Mega-caps gaining 2.5% on the week after jumping more than 5.0% during Thursday’s session following its Gemini AI model reveal.

The move in Alphabet helped propel the communication services sector to a 1.4% gain this week. The consumer discretionary sector was another top performer, climbing 1.1%. Meanwhile, the energy sector saw the largest decline (-3.3%) as oil prices dropped 3.5% to $71.18/bbl. The materials (-1.7%) and consumer staples (-1.3%) sectors also registered noticeable declines. 

On Friday we received the Jobs report for the month of November.  Nonfarm payrolls increased by 199,000 in November (consensus 175,000) after an increase of 150,000 in October.  The key takeaway from the report is that the unemployment rate dropped while the labor participation rate increased.  This suggests that employment activity was solid during November. 

Treasuries settled the week with losses, largely in response to the release of the jobs report on Friday. The 2-yr note yield climbed 18 basis points to 4.74% and the 10-yr note yield rose two basis points to 4.25%. This price action put some renewed pressure on the 2s10s spread, which tightened by 16 bps to -49 bps.  The fed funds futures market is no longer pricing in a rate cut in March following Jobs report, but it still sees an elevated possibility of a cut in May (78.5%).