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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Last week, there was a reversal of course for volatility. This led the NASDAQ 8% higher. Is there volatility risk ahead?
Monday S&P 500 0.74% | NASDAQ 2.04%
The markets opened with a bounce as oil prices continued their retreat from recent highs. Unfortunately, the bounce was short lived. The markets reacted to word that President Biden would be making a trip to the EU. The trip is to discuss a fourth round of sanctions against Russia. Additionally, China announced a lockdown for 50M people as a spread of COVID cases persists.
Tuesday S&P 500 2.17% | NASDAQ 2.93%
Oil prices retreated on Tuesday, falling below $100 a barrel. This move created optimism on equity markets that the inflationary impacts from oil will be short lived.
Wednesday S&P 500 2.24% | NASDAQ 3.79%
Markets opened sharply higher as anticipation of the rate hike later in the day was baked in. Additionally, news broke of a potential light at the end of the tunnel for the turmoil in Ukraine. Putin made statements that a Ukraine that was neutral but maintained a military could be a path forward. Oil prices fell in response.
Thursday S&P 500 1.23% | NASDAQ 1.33%
The rally continued to push markets higher. This marks the third day of growth. Early trading was choppy, but the markets picked up steam as the day wore on. The market surge occurred while WTI Crude Oil crossed back over $100/barrel. The inflationary effect oil has on the economy would deter stock market growth.
Friday S&P 500 1.17% | NASDAQ 2.05%
Markets climbed even with oil sustaining at $100/barrel. While oil sustained their levels, they didn’t rise as they have as of late. The sustained level is not ideal, but better then an advancing oil market. Interest rates on the year treasury fell on the sustained equity rally.
Conclusion S&P 500 6.20% | NASDAQ 8.59%
Beginning on Tuesday, markets surged throughout the week (even as the Federal Reserve Board (FRB) initiated lift off). While the initial hike was a mere 0.25%, the increase was a measured response that was received well by investors. Investor reaction after having a weekend to mull the FRB strategy will be an indicator of future weeks. A strategy that could see hikes at almost all of their remaining meetings.
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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.