It has been six weeks since the S&P 500 had a week when it was up, or down, more than 1.0%. That streak looks poised to come to an end this week, unless today doesn’t go well.<\/p>\n\n\n\n
The S&P 500 is up 1.8% for the week, so it has some cushion to work with to maintain that one-handle. Then again, the way the last few sessions have gone, it’s possible the S&P 500 could close out the week with a two-handle in terms of its return.<\/p>\n\n\n\n
Currently, the S&P 500 futures are up 12 points and are trading 0.3% above fair value, the Nasdaq 100 futures are up four points and are trading 0.1% above fair value, and the Dow Jones Industrial Average futures are up 93 points and are trading 0.3% above fair value on this options expiration day.<\/p>\n\n\n\n
The mega-cap stocks, the semiconductor stocks, and the regional bank stocks have been the star performers this week. The Vanguard Mega-Cap Growth ETF (MGK) is up 3.2%, the Philadelphia Semiconductor Index is up 8.4%, and the SPDR S&P Regional Banking ETF (KRE) is up 9.8%.<\/p>\n\n\n\n
The outperformance of the mega-cap stocks is no surprise given the way this year has gone; the outperformance of the semiconductor stocks is a hopeful surprise since they have leading-indicator status; and the outperformance of the regional bank stocks is a pleasant surprise given how things have gone since Silicon Valley Bank’s failure in mid-March.<\/p>\n\n\n\n
In any case, the collective outperformance of these stocks has put the S&P 500 on the cusp of breaking out above 4,200. It peaked its head above that level yesterday, but closed just shy of 4,200. Market participants are anxious to see a close above 4,200 knowing that it has been a stern area of resistance since last August.<\/p>\n\n\n\n
Some optimistic feelings this week about the debt ceiling discussions have acted as a catalyst for the upside action. That optimism is still intact with President Biden and House Speaker McCarthy both touting a sense of progress in the debt ceiling discussions.<\/p>\n\n\n\n
Of course, this itself stands as a near-term risk to the market if these discussions hit a roadblock. We will learn more over the weekend when President Biden returns Sunday from the G-7 Summit, where leaders have agreed to impose more sanctions on Russia for its invasion of Ukraine.<\/p>\n\n\n\n
We will also learn more today about Fed Chair Powell’s “perspective on monetary policy” when he participates in a panel discussion at 11:00 a.m. ET on that very topic. Should the topic of current monetary policy or future monetary policy arise, we suspect he will walk a neutral line that emphasizes the Fed being data dependent.<\/p>\n\n\n\n
In other words, we don’t expect him to be as declarative as Dallas Fed President Logan (FOMC voter) was yesterday in saying current data doesn’t support the Fed pausing in June. <\/p>\n\n\n\n