The Nasdaq Rose Through The Pressure
Wall Street finished an up-and-down week almost unchanged at the headline level, but the indexes told very different stories.
The S&P 500 slipped 0.1% for the week, while the Dow fell 1.7% and the Russell 2000 lost 1.5%. The Nasdaq gained 0.7%. A semiconductor rally helped the broad market avoid a larger selloff Friday.
That was a resilient result for technology stocks. Crude oil remained above $100 per barrel, the 10-year Treasury yield reached 5%, and the Federal Reserve raised rates for the first time in three years.
The Fed Delivered Its First Hike In Three Years
The Federal Open Market Committee voted unanimously to raise its target range by a quarter point, to 3.75%–4%. The statement said economic activity was expanding at a solid pace, capital investment was robust, and inflation remained elevated.
The new rate projections were firmer than the statement. Twelve of 18 participants projected a 4.125% midpoint at year-end, which implies one more quarter-point increase. Four projected 4.375%, which implies two more.
Higher rates increase financing costs and reduce the present value of distant profits. The Nasdaq’s weekly gain showed that company-level growth and AI demand can still overcome that pressure.
Oil Kept 5% In Play
Oil remained the macro variable tying the week together. The 10-year yield touched 5% Monday for the first time since 2023 and returned to that level Friday. Crude stayed above $100 as markets tracked the Iran war and threats to regional energy infrastructure.
The market’s reaction to the Fed hike was constructive because the move was expected and reinforced the central bank’s inflation credibility. The next leg will depend heavily on oil. A renewed surge would add to inflation pressure and keep long-term yields elevated.
The tension was especially clear in AI. Capital became more expensive at the same time that rising GPU prices signaled continuing scarcity and pricing power. We examined that tradeoff in Thursday’s post:
How We Traded It
Monday’s four proposals spanned quality retail, drug-development outsourcing, rare-disease commercialization, and treatment-resistant depression. The outsourcing and two biotech structures filled; the retail order expired unfilled.
Tuesday’s two AI-related proposals targeted enterprise automation and precision medicine. The enterprise-automation structure filled; the precision-medicine order expired unfilled.
Wednesday brought three healthcare-growth setups. The glaucoma-treatment and liver-directed oncology orders filled; the bioprocessing order expired unfilled.
Thursday’s three proposals covered enterprise AI infrastructure, global consumer growth, and bioprocessing. The consumer-growth structure filled; the other two expired unfilled.
Friday’s alert focused on China-free drone components, gene therapy, and enterprise AI. The drone-components and enterprise-AI structures filled; the gene-therapy order expired unfilled.
Nine of the week’s 15 proposed structures filled, each within its published limit. The six remaining day orders expired unfilled.
This Week’s Exits
This was our worst-performing OpEx batch of exits this year. Our analysis found that recent process improvements—made after the losses were already baked in—would have ameliorated about half of the losing exits. The rest largely reflected concentration risk. As we noted in our Exits post, “That risk is inherent in an approach designed to concentrate capital in our strongest ideas.” The Exits post below has the complete results and analysis.
Oil Still Has The Last Word
The Nasdaq absorbed the Fed’s first hike in three years because AI demand and semiconductor strength remained powerful offsets. That balance can hold while oil and long-term yields stabilize. Another sustained rise in both would raise the hurdle for growth stocks again.