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 retreated throughout April. Should we expect ‘Sell in May & Go Away’ or is there a reason for hope?
Monday S&P 500 0.02% | NASDAQ 0.14%
The trading week opened deep in the red. The week was expected to be weak as technology companies were reporting. The equity markets climbed throughout the day, but it was not enough to end in the green. Interestingly, the 10-year treasury retreated, lending to the climb in equity prices throughout the day.
Tuesday S&P 500 2.84% | NASDAQ 3.95%
Markets pushed lower curtesy of technology stocks. Safe haven bonds caught a bid on the day as interest rates fell in response to the broad equity sell-off. Markets are now near their lows from early March.
Wednesday S&P 500 0.21% | NASDAQ 0.01%
Equities attempted to gain on the day, but their momentum faded late in the day. Facebook was set to report earnings after hours and concerns may have caused late selling. The 10-year treasury rose 0.1% on the day (rates and price move in opposite directions).
Thursday S&P 500 2.47% | NASDAQ 3.06%
In a major course reversal of recent sessions, markets rose substantially on Thursday. The move came in spite of a surprise contraction in the US economy. GDP was expected to rise 1% and actually fell 1.4%. The market turn may have come as a weaker economy creates less reason for the Federal Reserve Bank (FRB) to be aggressive. The 10-year treasury remained fairly unchanged, which is the bond markets way of saying, not so fast. This indicates FRB moves should remain as previously expected.
Friday S&P 500 3.67% | NASDAQ 4.17%
Whelp, that was short lived. The rally from Thursday was completely erased on Friday as markets tumbled right from the open. Amazon earnings disappointed sourly and served up a sell off on Friday. AMZN alone fell over 14% on the day.
Conclusion S&P 500 3.27% | NASDAQ 3.93%
Markets successfully swept the month of April. All four weeks were down. The month opened with FRB minutes announcing quantitative tightening and markets did not need much else to start the retreat. One out of every five years (on average) we get a ‘Sell in May and Go Away’ where markets retreat. Could this be inverted as the first four months only saw one month of gains? Friday’s rout of markets may be reason to think so. The S&P and NASDAQ have revisited their February lows and Friday’s sell-off was broad and extended. Generally, that is the type of sell-off that sets a floor. Of course, the FRB meeting on the 4th could change all that. Some hope exists for a more dovish Fed given the lower GDP and softening core PCE (Inflation).
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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.