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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Growth stocks puffed out their chest this last week, but was it all in vain?
Monday S&P 500 – | NASDAQ –
Happy Rebellion Day!
Tuesday S&P 500 0.16% | NASDAQ 1.75%
The equity markets shifted dramatically to open the week. As it did the previous Friday, markets started the day in the red and clawed their way out. Investor sentiment was signaling a more growth friendly environment. This was because commodities continued to move lower, causing less and less concern around inflation. This would potentially mean a less aggressive Federal Reserve Bank (FRB). Growth stocks led on the day as a result.
Wednesday S&P 500 0.35% | NASDAQ 0.35%
Markets gained on the day, but it wasn’t until the final hour of trading that things moved into the green. Inflation driving commodities continued to tick lower. The FRB minutes from their last meeting came out on Wednesday. Nothing shocking was contained therein. It was just an over-abundance of inflation references and an FRB willing to do anything to eliminate the inflation threat.
Thursday S&P 500 1.50% | NASDAQ 2.28%
The climb resumed on Thursday as growth led the way higher. This came even as oil rose 3.83% on the day. The climb signals persistence to inflationary pressures. Trading may have been looking ahead at the jobs report due out Friday.
Friday S&P 500 0.08% | NASDAQ 0.14%
Friday was Jobs Day. The participation rate slipped a little; private nonfarm payrolls increased by 381K and the unemployment rate held steady at 3.6%. The job adds for the month were more than 100K higher than expected, showing continued health in the jobs market. This clears the path for the FRB to continue aggressively attacking inflation. On a sad note, Former Prime Minister of Japan, Shinzó Abe, was assassinated overnight. We send our prayer to Japan and all those personally touched by his loss!
Conclusion S&P 500 1.94% | NASDAQ 4.56%
Markets gained ground on the week, led decidedly by the battered growth markets. On the surface this appears as good news. Truly, this may be a signal of mounting concerns that the 2nd quarter will reflect negative growth for the economy. This would result in the classic definition of a recession. It means that the hawkish FRB goal of 3.5% fed funds rate by year end, may prove too lofty, which has pushed growth stocks higher. Ultimately, volatility should be expected as we come to the 2nd quarter GDP reading at the end of the month.
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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.