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 were little changed, but there was plenty of data. So, why did it feel like a ‘nothing to see here’ kind of week?
Monday
The markets were little moved on Monday. They are awaiting bigger news later this week as earnings season has its first test with 180 companies reporting. The S&P 500 rose 0.2% for the day.
Tuesday
The day was consistently painted in the red but ended at about breakeven. It ended only 0.90 points to the south when everything was said and done.
Wednesday
Markets were little moved for the day. Much of the day was spent waiting. First, for the Federal Reserve Board (FRB) to announce any potential changes (there were none) and second, for after-hours earnings. As a result, there was little movement on the day.
Thursday
The day started strong on the back of earnings data. GDP data released showed the US economy expanded at a rate 6.4% for the first quarter. Markets opened in the green 0.82%, they then faded to even mid-day. At the close the S&P 500 was 0.68% higher.
Friday
Markets waivered on Friday giving back all the profit from Thursday. Economic data was not the harbinger of this fall. Consumer confidence reached 88.3, above expectations.
Conclusion
I took a risk with naming the article ‘Nothing to see here.’ So those of you still reading, thanks! This was a busy week, 180 earnings announcements, an FRB decision, and a hotly awaited GDP release. For all of the turbulence that was expected, the S&P 500 moved literally 1 point! While it seems like a meaningless week, it was not. The earnings data and GDP data impressed as expected. Since goals were so high, there was a larger risk of market underperformance. Basically, the economy needed to live up to expectations and it did just that.
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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.