Markets sold consistently across the week. Is there more red to expect in coming weeks?
Monday S&P 500 1.20% | NASDAQ 1.79%
Happy Tax Day! Retail sales expanded more than expected in March. Three major companies reported earnings, all three met expectations, all of which were financials. This was not surprising as financials usually head up earnings season. They also give us a good indication of how earnings season should go. Retail sales, however, took center stage as a strong consumer reduces the need for Federal Reserve Board (FRB) rate cuts. This caused an outsized move downward as investors anticipate less stimulus for 2024.
Tuesday S&P 500 0.21% | NASDAQ 0.12%
Housing data for March came in weaker than market expectation. Ten major companies reported earnings, with two missing expectations. Although mild, the losses continued. FRB Chair Powell indicated that inflation’s recent strength does not give the board confidence to start easing policy.
Wednesday S&P 500 0.58% | NASDAQ 1.15%
11 major companies reported earnings on the day, with three missing expectations. Focus was squarely on earnings as there was little economic data on the day. Tech stocks took a hit as AI chip orders for a specific company did not meet expectations. As would be expected this hit the tech heavy NASDAQ harder than the S&P 500.
Thursday S&P 500 0.22% | NASDAQ 0.52%
Initial unemployment claims remain benign. Existing home sales also slowed in March. 11 major companies reported earnings on the day, with one missing expectations. Markets were down for the day, but in a less dramatic fashion. Robust employment data typically is not favorable information when hoping for an FRB rate cut (as investors are).
Friday S&P 500 0.88% | NASDAQ 2.05%
Six major companies reported earnings on the day, with one missing expectations. NASDAQ led the way lower as Tech and communications got hit hardest. The best performers on the day were defensives, like utilities, healthcare, staples, and also financials.
Conclusion S&P 500 3.05% | NASDAQ 5.52%
The week was bloody. There was not a single up day for the S&P 500 or the NASDAQ Composite. The moves were not founded in fundamental data, as earnings did well. Some forward guidance shows warning of slowing revenues throughout the year, but that is normal for the last two years. Economic data, which signals the economy is doing well, has actually pushed stocks lower. The stronger the economy, the less likely the FRB is to act in reducing rates. The sell-off has extended to approximately 6%. It may take a breather in the coming days but expect that we are not done.
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Markets moved north last week, but what does recent history tell us we should expect in response?
Monday S&P 500 0.84% | NASDAQ 0.81%
The week opened with the S&P 500 1% in the green but faded through the afternoon hours. Apple (AAPL) announced that they will be slowing their hiring for the remainder of this year and 2023. This is a warning signal for what may be to come for other companies.
Tuesday S&P 500 2.73% | NASDAQ 3.09%
A wave of earnings released on Tuesday buoyed the markets. The NASDAQ outpaced the S&P for growth as major communications company earnings came into focus.
Wednesday S&P 500 0.59% | NASDAQ 1.58%
Growth leadership continued on Wednesday. Fears of a recession have stoked larger flames around yields not rising as far as originally thought. A recession would pressure the Federal Reserve Bank (FRB) to be more passive.
Thursday S&P 500 0.99% | NASDAQ 1.36%
Markets performed in the green for the day, however fixed income havens performed well. This is an underlying signal of conservativeness within a bear market rally. Bonds rallied on what appeared to be recession fears, while stocks performed well on second quarter earnings data.
Friday S&P 500 0.92% | NASDAQ 1.86%
Manufacturing data beat expectations, however, services data slipped into contractionary territory unexpectedly for June. Services make up the vast majority of our economy. Investors moved in a risk off manner as a result. NASDAQ stocks, which led the way throughout the week, led the march lower.
Conclusion S&P 500 2.55% | NASDAQ 3.33%
Friday’s negativity was not enough to dampen all the growth from the week. The NASDAQ led the way, rising more than 3%. This has now turned into a see-saw market; one week up, the next down. As of late, the downs have not been as deep. The earnings calendar is heavy this week but additionally, the Federal Reserve Board (FRB) is meeting. That will be watched closely as a 0.75% hike is expected.
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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.