The S&P 500 ended its streak of four consecutive record closes on Friday, finishing marginally lower, the Dow fell 57 points, while the Nasdaq added 0.1% to extend its closing record streak to 5.
Market sentiment was dampened by the Michigan consumer sentiment index unexpectedly dropping to a seven-month low and rising inflation expectations for the five-year period.
In corporate news, luxury retailer RH's stock plummeted 17.2% after reporting a significantly larger-than-expected first-quarter loss.
Stellantis shares fell 4.2% following the CEO's comments about addressing "arrogant" mistakes in the US that have led to sales declines and inventory issues.
Conversely, Adobe surged 14.5% after raising its full-year guidance, and Broadcom gained 3.3% to mark its best week on record, jumping 23%.
Week to-date, AAPL added roughly $366 billion worth of market cap to its value - that’s the equivalent of adding the value of Costco (COST). From the low of less than two months ago (April 19), Apple has climbed by more than the value of 14 General Motors (roughly $786 billion).
The primary driver of Apple’s performance was Artificial Intelligence (AI) - at Apple’s Worldwide Developers Conference, the company talked about new AI features that investors believe will drive a major product upgrade cycle.
An AI honourable mention from last week goes to Broadcom (AVGO), a stock with a larger market cap than Tesla. The stock jumped 13% higher on its better-than-expected earnings report. The company’s double-digit organic revenue growth in the quarter was almost entirely driven by AI, which is up by 280% year-over-year. AVGO is up almost 50% year-to-date.
AI driven economic activity through mega-capitalisation stocks like Nvidia, Apple and Broadcom are the key drivers to lifting the large-cap, market-cap weighted indexes like the S&P 500 and NASDAQ Composite to all-time highs.
The equally weighted S&P 500 Index (ETF RSP) is only up 5% year-to-date and the small-cap Russell 2000 index (ETF IWM) is up 2%.
What has happened year-to-date is the very big are getting even bigger on very strong AI momentum and the average stock is languishing. The AI transformation is rapidly being priced into equities - at some point, it will be fully reflected in equity values.
Lastly, this is one of the few weeks year-to-date when the “Stock-of-the-Week” was not Nvidia (NVDA). For those into cycles and bubbles, could NVDA be in the last stage of a reflexivity bubble?
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