 | AUTHOR: Jason Roque, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Financials, Rates, PMI |
Markets ran aground last week. Details in some reported earnings may harbor some bad news for the future…
Monday S&P 500 0.33% | NASDAQ 0.28%
The week opened with financial stocks still in focus from the previous Friday. An earnings “beat” by Charles Schwab helped markets end in the green for the day.
Tuesday S&P 500 0.07% | NASDAQ 0.04%
Stocks were little changed on Tuesday, however underlying this, was a revenue miss by Goldman Sachs. Financials are especially being attended to as this is the first earnings season following the failure of Silicon Valley Bank.
Wednesday S&P 500 0.00% | NASDAQ 0.03%
The day ended breakeven, but the ride getting there was anything but even. The day opened in the red and clawed its way back. Earnings continued to impress for the most part. Rates rose slightly as expectations of a May interest rate hike became firmer.
Thursday S&P 500 0.58% | NASDAQ 0.80%
Tesla earnings expectations overshadowed economic indicators for the day as Tesla margins are being questioned. Initial jobless claims rose to 245K, which is higher than in recent months. It was welcomed as it does not show aggressive weakness in the jobs market.
Friday S&P 500 0.08% | NASDAQ 0.10%
Markets ended the day just about breakeven. This was not enough to bring us into the green for the week. Financials are largely in the rearview mirror. Investors are now turning to tech and communications companies over the next few weeks. Preliminary readings for US Manufacturing and Services both showed strength. Both indices broke upward of 50, signaling expansion.
Conclusion S&P 500 0.10% | NASDAQ 0.42%
Bank earnings stole the headlines for the week. While earnings overall met expectations, a specific detail of the reports probably carries more meaning going forward. The banks are increasing their cash reserves in anticipation of more unsecured debt defaults (credit cards). As inflation has damaged the cash balance for many households, it has also increased the amount of credit card debt outstanding. From Q1 of 2022 through to Q4, credit card debt has increased $150B according to the New York FRB website. This could be a harbinger of bad news ahead for household spending and it should produce slower economic growth ahead.
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