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 moved a lot to go absolutely nowhere last week. Should we expect markets to continue to run in place?
Monday
Happy President’s Day!
Tuesday
S&P 500 lost 1.01% on Tuesday as tensions over the long weekend escalated in Ukraine. This marks the first time the S&P 500 closed down 10% from its closing high back on January 3rd.
Wednesday
The Markets opened in the green on Wednesday, but quickly faded to red. The S&P 500 lost 1.84%, but in a common theme as of late. The NASDAQ fell 2.57% leading the way lower. The push came as tensions continued to escalate in the standoff over Ukraine. Sanctions levied on Tuesday were followed with additional sanction threats on Wednesday.
Thursday
Late Wednesday night it was announced that conflict between Russia and Ukraine was no longer a possibility, but a reality. Markets opened deep in the red Thursday morning. As the day wore on and more governments came out condemning the move and specifying their response, markets climbed. This provided a level of certainty where buyers felt more comfortable coming back to the market. The S&P 500 ended up climbing 1.51% on the day. The NASDAQ led the way higher. The move sent the message that rate hikes may not be as frequent given geo-political upheaval.
Friday
Markets continued their march higher on Friday as the S&P 500 gained 2.24% on the day. This time, the S&P 500 led the way as investors were more measured to the impact that Ukraine will have on the Federal Reserve’s interest rate decisions.
Conclusion
While the intra-week change in the S&P 500 was as much as 5.50%, the week over week change was nominal. The week over week change itself was nominal. The S&P 500 ended up rising a meager 0.79%. One thing is for sure: volatility has spiked over the past several weeks and will likely remain in place for the next 30 days.
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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.