Markets grew for the week for the first time in a month. Is it a reason to celebrate or a breather in the pullback?
Monday S&P 500 0.87% | NASDAQ 1.11%
Nine major companies reported earnings, with two missing expectations. Equities jumped to open the week. Outside of earnings data there was not much to support the rally. It was likely a jump on three consecutive weeks of down market, creating better by opportunities.
Tuesday S&P 500 1.20% | NASDAQ 1.59%
35 major companies reported earnings, with five missing expectations. Housing data came in better than expected. The heavy earnings data drove markets higher on Tuesday, pun intended. GM (GM) and Tesla (TSLA) were among reporters that helped propel markets.
Wednesday S&P 500 0.02% | NASDAQ 0.10%
40 major companies reported earnings, with six missing expectations. Core durable goods orders came in lighter than expected. Strong earnings data was counter-balanced by higher rate expectations. This left markets fairly unchanged.
Thursday S&P 500 0.46% | NASDAQ 0.64%
60 major companies reported earnings, with 13 missing expectations. GDP grew at a much slower pace than expected(1.6% vs 2.5%). Unemployment data continued to show strength. GDP and forward guidance from Meta (META) spooked markets early. They managed to climb halfway out of the hole that was dug as the earnings flowed in throughout the day.
Friday S&P 500 1.02% | NASDAQ 2.03%
13 major companies reported earnings, with five missing expectations. Consumer sentiment softened in April. Core Personal Consumption Expenditures (PCE) held steady at 2.8% in March. This is the Federal Reserve Board’s (FRB) preferred gauge of inflation. Between PCE data and earnings from Alphabet (GOOG) and Microsoft (MSFT) markets surged on the day.
Conclusion S&P 500 2.67% | NASDAQ 4.23%
The markets experienced a strong bounce back this last week in comparison to the last three weeks. Do not be fooled. Markets have a way to go to recapture highs as the growth did not even recover from the prior week. This indicates that there is room for markets to continue the run up as earnings season wears on. There are major hurdles this coming week with the FRB meeting, Jobs data, and Apple (AAPL) reports earnings.
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Markets ended the week slightly down from the last. Rates were in focus, but should they be?
Monday
Markets were in the red most of the day only to surge into the green in the closing minutes. Monday was light on economic data, but this week will have plenty for investors to focus on. Retail sales report on Tuesday, the Federal Reserve Board (FRB) meeting ends Wednesday, and Friday will be busy for derivatives.
Tuesday
The movement for markets was mild on Tuesday, but still in the red. The FRB kicked off their two-day meeting. This is a hotly awaited meeting as investors eagerly await the FRB’s response to the recent rise in rates. If they respond with an operation twist it will be viewed as yield curve control. As the long end of the curve rises, we create gap to the next recession. This is because we increase the travel required to a yield curve inversion.
Wednesday
Markets ran in red most of the day. At 2PM that all changed. The FRB meeting adjourned with no change in rates as expected. The dot plot (individual member polling for future rate hikes) pointed to an increasing acceptance of rate hikes in 2023. This willingness to accept the reality of the recent rate surge helped markets push ahead.
Thursday
Everything reversed course on Thursday. While the FRB reaction yesterday was welcomed, Thursday the focus was on higher rates likely not fading. The 10-year treasury was above 1.75% for the first time since before the pandemic.
Friday
Markets were fairly range bound on Friday. What was poised to be an active day in the derivative markets proved to be a mundane end to the week. Markets ended the day moderately lower.
Conclusion
In all The S&P 500 ended the week lower. Driven by a rise in the 10-year treasury rate, ending the week at 1.74%. A high enough level to cause concern (specifically for the speed by which we got there). However, this is a low enough level that monetary conditions are viewed as extremely loose. Pre-pandemic, the lowest level the 10-year treasury had ever reached was 1.37%. With it merely .37% higher, there is reason to ask if too much is being made of the recent rise.
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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.