Weekly Market Watch

To Infinity and Beyond

Global equities rallied last week, supported by record-breaking initial public offering (IPO) enthusiasm, hope for de-escalation in the Middle East conflict and artificial intelligence (AI) capital expenditure (capex) buildout. The successful and historic $75 billion IPO from SpaceX energized investor appetite for mega-capitalization (cap) public offerings, while signaling confidence for AI-related companies. Small-cap stocks outperformed their large-cap counterparts on the tech optimism, with the Russell 2000^® Value outpacing Growth.

Recent inflation reports showed better-than-feared outcomes. While the Consumer Price Index (CPI) reached the highest level in three years, primarily due to energy costs, both the core CPI and core Producer Price Index — which excludes food and energy costs — saw minimal acceleration on a year-over-year (y/y) basis.

Market Outlook

Given the market’s positive reaction to the recent inflation data, attention now turns to this week’s Federal Open Market Committee (FOMC) meeting. It will be led by newly appointed Federal Reserve Chair Kevin Warsh, and it comes as markets price in at least one rate hike by the end of 2027.

Chart of the Week

Despite investor enthusiasm around IPOs, they have generally underperformed U.S. large-cap equities during the subsequent three years.

Nonetheless, successful IPO events indicate positive economic expansion supported by capital market growth and investor confidence.

We continue to have a positive view of equity markets as the fundamental outlook remains robust.

FOR AN IN-DEPTH LOOK

View Chart of the Week

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For definitions of indexes used in this publication, please refer to pnc.com/indexdefinitions.

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