Green Season | April 16, 2021 | FFS

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.

~ Your Future… Our Services… Together! ~

Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:

Facebook | Twitter | LinkedIn

FOR MORE INFORMATION:

If you would like to receive this weekly article and other timely information follow us, here.

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.

Markets were green as earnings season got under way last week. Should we expect this to continue?

Monday

There was very little market data released on Monday. Markets were little changed on the day as the S&P ended in the red by .81 points and the NASDAQ was 0.4% lower.

Tuesday

CPI data rose to 2.5% YoY, the highest level since 2018. As of late, this would have led markets lower. A pause in the Johnson & Johnson vaccine actually caused concern of a slowdown in re-opening. This left the markets room to run higher as future inflation expectations moderated.

Wednesday

Markets floated in the green most of the day as earning season got underway. They slid near the close as jubilee over reduced risk of inflation was viewed as overdone the prior day. Rates rose on the day affirming the inflation trade.

Thursday

Retail Sales and initial jobless claims boosted the markets at the open. That surge held through the close with NASDAQ leading growth on the markets. Initial jobless claims fell to 576K, the lowest level since the start of the pandemic. Retail sales were expected to grow 5.9%, a healthy rise, however they grew by 9.8%!

Friday

Markets rose on Friday to end the week. The rise allowed all three indices to end the week in the positive. Leadership was in the S&P 500 on the day, resuming the re-inflation trade.

Conclusion

The S&P 500 gained over 1% for the week as earnings got underway. Financial companies led the way and impressed on earnings. Expectations will likely rise for them as long-term interest rates have been on the rise. Economic data for the week was generally positive and received as such. This past week was good measure of expectations for this earnings season!