The past week told the tale of three markets as the tech-heavy Nasdaq climbed 1.2%, the Dow Jones Industrial Average lost 0.8%, and the S&P 500 set an intraday record high, but finished the week essentially where it started (-0.1%).
Quarterly earnings were largely responsible for the differential in returns with the Nasdaq benefiting from upside surprises reported by heavyweights like Apple (AAPL), Alphabet (GOOGL), Amazon.com (AMZN), Facebook (FB), and Celgene (CELG). Conversely, the Dow was pressured by weak results from ExxonMobil (XOM) and disappointing comparable sales results fromMcDonald's (MCD). The broader S&P 500 split the difference between the Dow and Nasdaq.
In addition to receiving a boatload of earnings, investors had to recalibrate their expectations for monetary stimulus from global central banks. The Federal Reserve made no changes to its policy stance and only hinted at the possibility of a rate hike in the near term. The central bank shared its lukewarm outlook on Wednesday, two days before the Friday release of the advance reading of second-quarter GDP, which missed estimates (1.2%; Briefing.com consensus 2.6%). Also on Friday, the Bank of Japan called for just slight adjustments to policy, undershooting market expectations for aggressive stimulus measures. The Japanese yen rallied in response, pressuring the dollar/yen pair to a two-week low near 102.00.
Rate hike expectations receded throughout the past week. Since last Friday, the implied probability of a rate hike in December, estimated by the fed funds futures market, declined from 47.8% to 33.0%. The fed funds futures market does not expect the Federal Reserve to depart from its current target range until after July 2017.
| Index | Started Week | Ended Week | Change | % Change | YTD % |
| DJIA | 18570.85 | 18432.24 | -138.61 | -0.7 | 5.8 |
| Nasdaq | 5100.16 | 5162.13 | 61.97 | 1.2 | 3.1 |
| S&P 500 | 2175.03 | 2173.60 | -1.43 | -0.1 | 6.3 |
| Russell 2000 | 1212.73 | 1219.94 | 7.21 | 0.6 | 7.4 |
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