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 fell hard for the week. Omicron rose as a threat, but was that really the big news of the week?
Monday
Markets opened the week mildly lower. The S&P 500 fell 0.32% on the day. Federal Reserve Board Chair Powell was renominated for his seat. The lack of a reaction from equity markets is a result of the known behavior he represents. Bond markets actually reacted adversely as he represents a dovish stance. This means there are concerns that he may wait too long to take necessary actions.
Tuesday
The S&P gained back some of the losses from Monday as it advanced 0.16%. Manufacturing data rolled in better than expected; however, services data (the crux of our economy) softened.
Wednesday
On Thanksgiving eve, markets managed to rise as the S&P 500 closed above 4,700. The S&P 500 gained 0.22%. The major news was that initial jobless claims fell to 199K. This marks the first time that this statistic has fallen below pre-pandemic levels!
Thursday
Happy Turkey Day!
Friday
Omicron gripped markets around the world on Friday. As there is little certainty surrounding the new variant, the unknown drove trading. Recovery stocks suffered, while stay at home stocks caught a bid. With the Thanksgiving holiday causing light trade, volatility was exacerbated, and the S&P 500 shed 2.27%!
Conclusion
Most will see the actions of Friday as the big news, however, the renomination of Powell may prove more impactful. Little is known about Omicron to understand its full implications. The renomination of Powell provides certainty that we will likely continue on the path of tapering. That path maybe accelerated as result of persistent inflation. This also means a continued path towards rate hikes in early 2023. Those hikes may also be accelerated to fall 2022 as a result of persistent inflation. These changes represent adjustments to outlooks, rather than wholesale changes to investment strategies.
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