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 charged back late in the week. This led to weekly gains, but does the market have staying power?
Monday
Memorial Day
Tuesday
The holiday lengthened weekend did not result in volatile markets Tuesday. The S&P 500 was virtually unchanged for the day. ISM Manufacturing improved more than expected, likely keeping markets calm as they wait for jobs data.
Wednesday
Wednesday’s market movement was muted, much like Tuesday. The S&P 500 gained 0.14% on the day. Market participants seemed as though they are waiting for the results of the monthly jobs report due out Friday.
Thursday
Markets were more active on Thursday as data began to flow. Jobless claims fell below 400K for the first time since the start of the pandemic and services data jumped dramatically. While this was good news, the S&P 500 shed 16 points on what this could mean for the jobs report.
Friday
The May jobs report dropped on Friday morning, showing unemployment has fallen to 5.8%. More importantly only 492K private nonfarm payrolls were added in May. This was a ‘bad news is good news’ situation as the S&P 500 added 36 points on the day. The softer data eases concern over potential inflation.
Conclusion
The S&P 500 is with in 3 points of its all-time high set at the start of May. With earnings season behind us and economic data for May mostly out, it may be tough for the index to set record highs in the coming weeks as headline risk will carry more weight.
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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.