Stocks enjoy best week in a year
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Stocks ripped last week, with the S&P 500 posting its best showing in a year.
Context: The rally reflected a perfect combination of inflation-easing economic data, dovish cooings by the Federal Reserve, and rock-solid earnings results.
The numbers: The S&P rose 5.9%, the largest weekly leap since November 2022. The same for the Nasdaq composite index which rose, 5.2%.
Between the lines: The real key to the rally was the sharp decline last week of long-term interest rates — the yield on the 10-year Treasury note — which plunged from almost 5% to 4.5%, a massive move in the typically staid bond markets.
- As we've written ad nauseam — especially last year when a surge in rates clobbered stocks — bond yields have been the single most important key to understanding the stock market in recent years.
State of play: Stocks, which had been up nearly 20% earlier in the year, and saw those gains shrink to just 7% late last month, are now up 13.5% in 2023.
What's next: For the good times to keep rolling, the market will be watching the U.S. government's auction of 10-year Treasury notes on Wednesday. And the October reading on the Consumer Price Index a week from tomorrow will get a lot of eyeballs.
The bottom line: The dream of the bull market is alive — (in Portland).
