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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In spite of a rocky start, markets grew nicely this last week. Should we expect more growth to come?
Monday
Markets dove to open the week. The S&P 500 lost 1.6%. Fears over slower growth due to the Delta Variant and rising inflation gripped the markets. Earnings did not fail to impress for the day, which resulted in a few highlights. However, they did not burn bright enough to offset the negative sentiment.
Tuesday
Markets rebounded strongly as the Monday move turned into a ‘buy the dip’ mentality. The S&P 500 ended up gaining 1.5% on the day. Housing starts out-performed, coming in at a 6.3% increase versus 2.1% the prior month.
Wednesday
The move higher continued on Wednesday, as earnings were in focus. Earnings pushed the markets higher as Netflix was the only major company to miss earnings on the day. The economic data calendar was light with mortgage data being the highlight.
Thursday
The S&P 500 advanced .20% on Thursday. It was a day where it felt as though the markets were chasing their own tail. Markets actually opened in the green, despite initial jobless claims missing expectations. It then fluctuated into the red fulfilling the economic data that was released, but ended back in the green… Investor sentiment has been running strong ever since Monday’s sell off.
Friday
Markets rallied into the end of the week, with the S&P 500 climbing 1.01% on the day. Manufacturing data outperformed, coming in at 63.1, beating the 62.0 expectation. Services fell short, falling to 59.8. While strongly expansionary, it missed the intended mark of 64.8. This is an indicator that the re-opening is moving slower than expected. A slower re-opening could signal that inflation may not be as ramped as initially thought by many investors.
Conclusion
The strong Friday performance brought the week to a close up 1.95% on the S&P 500. This was an impressive week of gains when you consider that the S&P 500 lost 1.6% on Monday. The rebound and strong close on Friday are a testament to earnings. They are currently running at 86% of companies beating expectations. We are about a quarter of the way through earnings season, so there is still much to look forward to.
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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.