 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, PMI Data, Earnings, GDP |
Markets rallied for the second week in a row. Was the move higher sustainable or cause for concern?
Monday S&P 500 1.19% | NASDAQ 0.86%
Markets climbed to open the week. Four out of seven major earnings reports beat expectations. Additionally, interest rates fell slightly on the day as PMI data signaled contractionary territory. This would typically lead to a NASDAQ outperform, but the index stayed more muted. It was not surprising as this is a big week for Tech earnings reports.
Tuesday S&P 500 1.63% | NASDAQ 2.25%
The rally continued on bad news… Home prices and consumer confidence both signaled a weaker economic environment. The weaker environment prompted a steep fall in rates as it may signal a more dovish Federal Reserve Bank (FRB). That fall prompted heavy gains in the market, and not surprisingly, the NASDAQ led the charge.
Wednesday S&P 500 0.74% | NASDAQ 2.04%
Earnings data was focused squarely on the tech/communications sectors Tuesday evening and Wednesday. The data was disappointing, specifically advertising spends missed estimations. This likely occurred as companies are starting to hold more capital in anticipation of a recession. The risks of this factor caused an outsized loss for the NASDAQ.
Thursday S&P 500 0.61% | NASDAQ 1.63%
Earnings data late on Wednesday influenced the open on Thursday. Markets struggled to move north on poor tech earnings. On the brighter side, GDP for the third quarter expanded by 2.6%. The rebound in growth comes with the cautionary tale of slowing demand. The NASDAQ continued to lag on weak tech earnings.
Friday S&P 500 2.46% | NASDAQ 2.87%
Earnings from Thursday evening influenced the trade at open. Markets rallied on strong earnings from Apple (AAPL). At the same time, the rally may have been on the back warnings as a part of Amazon’s (AMZN) earnings. The warning was regarding purchasing power of consumers being diminished. This could contribute to a rally as follows: low spending, leading to weaker inflation, leading to a less aggressive FRB.
Conclusion S&P 500 3.95% | NASDAQ 2.24%
Yeah, markets climbed for the second week. A closer look at the logic behind the gains will disappoint you. Monday saw PMI data that signaled a recession coming. Tuesday brought weaker consumer confidence data and home prices. Wednesday gave us news of weaker advertising spending for major internet outlets. Lastly, Friday gave us bad news on consumer spending. While the rallies are nice and help account balances, the reality is that they are coming on weaker economy data. That should eventually lead to more losses on the market…
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