The end result of the week was green, but was there reason for it and does it tell us anything for this week?
Monday S&P 500 1.03% | NASDAQ 1.19%
Eleven major companies reported earnings, with one missing expectations. Much of the movement on Monday came as an extension of the Friday rally. A move based on the weaker than expected jobs report. Growth stocks outperformed as lower interest rates would carry a greater impact on their performance.
Tuesday S&P 500 0.13% | NASDAQ 0.10%
Twenty-three major companies reported earnings, with two missing expectations. Markets were little changed on the day. While stock stood steady, fixed income yields did slip on Tuesday. In general, this is a continuation of the last few days.
Wednesday S&P 500 0.00% | NASDAQ 0.18%
Fourteen major companies reported earnings, with three missing expectations. Mortgage rates slipped a little lower as rate hike expectations faded. The 10-year treasury rate, to the contrary, rose slightly on the day. This was a reversal of a recent trend. Not a notable enough increase to think that sentiment has changed.
Thursday S&P 500 0.51% | NASDAQ 0.27%
Eleven major companies reported earnings, with three missing expectations. Initial jobless claims came in higher than expected, but still at a muted level. The jobs data brought markets out of their two-day coma. Employment data is showing signs of softening. The hope is the Federal Reserve Board (FRB) will start getting the signals needed to start cutting rates.
Friday S&P 500 0.16% | NASDAQ 0.03%
Michigan Consumer Sentiment is projected to fall to 67.4 in May. If that holds true, it will be the lowest reading since August of 2023. This was a period where fears were high that a recession was on the horizon. The lack of earnings data and the weaker potential sentiment sent markets higher. Again, weakness is a signal of potential FRB moves.
Conclusion S&P 500 0.55% | NASDAQ 1.43%
Markets advanced for the week, albeit with little decisiveness. Market growth has all but stalled as more data is needed to entice investors. Last week’s message was clear from the FRB; they do not expect that their next move will be a hike. The focus is on the timing of a cut. Earnings data will slow down next week; however, inflation data will be in focus. It should give investors a better read on potential rate cuts later this year.
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Weakness persisted in the market across last week. Is this a trend that will likely continue or a soft patch in data?
Monday
Happy President’s Day!
Tuesday
Markets were flat to open the week. This was not the case for the energy sector, however, as energy added 2.51% on Monday. Much of the energy move came from the harsh winter storm and elevated energy usage information that should follow. Financials and communications were the only other sectors in the green for the day.
Wednesday
The day started lower and spent the trading day pulling out of the hole. It ended the day even. There was unexpected strength in producer prices (a leading indicator of inflation), retail sales, and capacity utilization (an indicator of corporate production).
Thursday
Much like Wednesday, Thursday opened in a hole and spent much of the day climbing out. Markets did not make it all the way out, however. Housing data and jobs data were both in focus. Building permits rose more than expected, however new starts decreased substantially. Jobless claims, a major focus right now rose more than expected. The weakness of data led to a softer market for the day. As of late this would have caused a market rise as it would have increased the likelihood of stimulus. Perhaps that is a foregone conclusion at this time.
Friday
Services data and existing home sales both impressed for Friday. Markets opened in the green but were unable to hold the momentum. They faded to breakeven and fell into the red to end the week. Signaling an indication of concern for the weekend news cycle.
Conclusion
Investor behavior throughout the week seemed to signal initial concerns, but with persistent buying. Across the week markets ended up shedding 0.72%. This was not much of a move. Buy sentiment persisted even in the face of weak economic data last week. Overall data has shown to be improving quicker than expected. This should lend itself to a continued rally.
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Always remember that while this is a week in review, this does not trigger or relate to trading activity on your account with Financial Future Services. Broad diversification across several asset classes with a long-term holding strategy is the best strategy in any market environment.
Any and all third-party posts or responses to this blog do not reflect the views of the firm and have not been reviewed by the firm for completeness or accuracy.