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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There was a little run up on markets from a point total standpoint, but volatility was way up. What does it mean?
Monday
Happy 4th of July!
Tuesday
Markets dove on Tuesday to open the week. The S&P was down nearly 1% by mid-day but came back to end the day down 0.2%. The Delta variant took center stage as concerns are mounting that it could derail the re-opening trade currently in place.
Wednesday
The S&P 500 reached fresh all-time highs. The improved investor sentiment was on the release of Federal Reserve Board (FRB) minutes. They reflected a dovish FRB heading into the second half of 2021. The interesting thing was that interest rates in the treasury market were down. So, while there was a bid in the equity markets, there was not a sell off in bonds. This makes the rally more conservative.
Thursday
Broadly all major indices were down on Thursday. This came as the Delta variant surpassed the Alpha variant as the dominant COVID strain in the US. Continued stress over the variants will likely keep markets from climbing unfettered.
Friday
Markets surged back on Friday and ended in the green for the day (and the week). Yields increased mildly as gold and oil both surged, which are both bullish and bearish at the same time. The increase on a Friday again is a good sign that little negativity is expected across the weekend news cycle.
Conclusion
The S&P 500 rose a meager 17 points for the week. The point line, however, is deceptive as it was a volatile week. The CBOE VIX (Volatility measure) increased from 14.5 to 17.5 as the daily swings were in excess of those in the prior week. The coming week will have economic data in the form of retail sales and industrial production. The variant progress will continue to be watched as well. Additionally, GDP for China will be reported giving further indication to US consumption via Chinese exports. Increased volatility is not surprising as we move into summer months. The reduced volume is the result of summer vacations. With lower volume comes increased volatility. Increased volatility does not necessarily come with losses, it just means the swings are more violent.
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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.