Week in Review: Markets Eke Out Gains as Fed Mulls Interest Rate Hikes

Fed guidance this week was clear: inflation is still a problem, and half of the FOMC members are penciling in the possibility that rates could move higher this year.

The interest rate decision and subsequent press conference ignited the CBOE Market Volatility Index (VIX), but an agreement reached between the U.S. and Iran helped calm markets.

Looking at this week’s results for the major averages, the Dow Jones Industrial Average ($DJI) was higher, but pared gains that led to a mid-week all-time high. The tech-heavy Nasdaq-100 (NDX) was up roughly 3% and the S&P 500 (SPX) was up more than 1%. The PHLX Semiconductor Sector Index (SOX) rose roughly 9%, exhibiting the resilience of the AI-tech trade.

The themes of the week for investors:

1. Mega-cap technology stock leadership, often with an AI twist, for names from Intel Corp. (INTC), Microsoft Corp. (MSFT), NVIDIA Corp. (NVDA), Micron Technology (MU), to Space Exploration Technologies Corp. (SPCX).
2. Stubborn inflation dependent on the pace of oil shipments in the Strait of Hormuz.
3. Sector rotation highlighting underappreciated investments.

Here is a curated list with some of our best video interviews and commentary from this past week.

On technology and “the Great 8”:

• INTC Growing Role in AI Buildout Through Hyperscalers, Inference & CPUs
• NVDA & MSFT Fog Clears on Interest Rate Outlook 
• SPCX Grips Markets, Passes AMZN Market Cap on Third Day of Public Trading

On oil, energy, and U.S.-Iran agreement:

• U.S.-Iran Memorandum Lifts Dark Cloud Over Stock Market
• Why the U.S-Iran Memorandum of Understanding is Disappointing
• Exxon Mobil (XOM) Upgraded Despite Oil Prices, Middle East Situation

On the Fed:

• FOMC Summary: Why new Federal Chair Kevin Warsh’s communication style might be fresh air for markets
• Why the FOMC’s Dot Plot may not be as Reliable, and What to Watch in Warsh’s Fed

On sector rotation:

• Why Some Emerging Market investments have performed three times as well as the S&P 500 year to date. Will AI drive a further EM rally?
• Moving Beyond AI and Tech: Rotation into Undervalued Sectors, Cyclicals Including Consumer, Financial and Industrial Names

For more, watch Schwab Network videos on specific industries.

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