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 rose last week, and optimism was a bound early in the week. Was it misguided?
Monday S&P 500 2.59% | NASDAQ 2.27%
Markets opened the week in stark contrast to how they ended last week (and month). The sad part was that the move higher for equities came on signals that the US economy weakened. It was a move that signaled an expectation of a less hawkish Federal Reserve Bank (FRB). As of late, rallies of this type have been very short lived.
Tuesday S&P 500 3.06% | NASDAQ 3.34%
The rally continued for a second day. The strength of these increases is concerning as a reversal day would likely be just as deep. The moves to the north are happening under a false hope of a pivot from the FRB. This came as the Royal Bank of Australia delivered a smaller increase than expected. Additionally, after the UK removed a tax cut for the wealthy, interest rates began to retreat. This reaction was merely a reversal on the rate increases after the policy was announced a week ago. The FRB very plainly told markets on 8/26 not to expect a pivot until inflation has been beaten. With inflation siting above 8%, it seems unlikely to consider that beaten. This rally will likely be short lived.
Wednesday S&P 500 0.20% | NASDAQ 0.25%
The shine on the two-day rally came off a little on Wednesday. 10-year yields bounced back up and equities opened deep in the red. The good news is that throughout the day, equities managed to claw all the way back to even.
Thursday S&P 500 1.02% | NASDAQ 0.68%
Equities turned lower on Thursday as FRB governors are echoing the hawkish stance of the Bank. Additionally, initial jobless claims rose, however, it was a slight increase. 219K job losses is a pace that signals a strong job market. The number will likely increase to 300K or higher in a recession.
Friday S&P 500 2.80% | NASDAQ 3.80%
Happy Jobs Friday! Markets tumbled to close out the week. The jobs data was strong as the unemployment rate crept down to 3.5% on 263,000 non-farm payroll additions. The FRB is looking for the rate to increase and for job adds to slow closer to break even. Inflation will likely continue to be an issue awhile unemployment remains below 4% to 4.5%.
Conclusion S&P 500 3.01% | NASDAQ 0.73%
Equity markets rose for the week. Something that has been rare as of late. The rise, however, is seeming short lived as it was mainly from the first two trading days of the week. The rest of the days represented a claw back of those gains. The reason for gains was that if we get a recession, the FRB will pivot strategy to stabilize the economy. There has been zero indication from a very transparent FRB that this would be the case. There is historical precedent to say the market is right, however, all of those precedents came during low inflationary periods. At this point, rather than looking for a pivot, markets should accept a stabilization of rates is most likely. This would be the case until we see substantial damage to the employment market. At which time, the FRB would likely pivot as enough damage would have been done to inflation.
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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.