 | AUTHOR: Jason Roque, MS, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, FRB, Election, Inflation |
Markets gained last week… Really last Thursday. Can that momentum be sustained?
Monday S&P 500 0.96% | NASDAQ 0.85%
Earnings season is nearly over. 85% of S&P 500 companies have already reported. Today’s earnings were notably weak, yet markets climbed. The advance may be attributed to news over the weekend that shows gridlock is likely the outcome of tomorrows elections.
Tuesday S&P 500 0.41% | NASDAQ 0.89%
Markets did little on Tuesday as all anticipation was around the election. The movement was a slight fade given the risks of the events of the coming few days.
Wednesday S&P 500 2.08% | NASDAQ 2.48%
The election on Tuesday, not surprisingly, yielded no resolution on Wednesday. This shifted focus on the markets from the election to inflation data scheduled to be released on Thursday.
Thursday S&P 500 5.54% | NASDAQ 7.35%
CPI, CPI, CPI. Inflation has been the story for the last year or so. CPI data out on Thursday showed inflation falling from 8.2% to 7.7% and more importantly, core inflation fell to 6.3%. The results were below expectations which prompted a heavy rally on markets. Realistically the celebration may be overdone. Importantly though, it does indicate a light at the end of the tunnel for FRB rate hikes.
Friday S&P 500 0.92% | NASDAQ 1.88%
University of Michigan data out on Friday buoyed market, but not because news was good. Consumer sentiment is projected to fall to 54.7 (Nov) from 59.9 (Oct). While this spells weakness for holiday spending, it could also spell weakness for future inflation. To the contrary, however, their inflation expectations have increased slightly. This shows a more ingrained mentality regarding inflation, something that the Federal Reserve Bank (FRB) is trying to avoid.
Conclusion S&P 500 5.90% | NASDAQ 8.10%
Markets had a stellar week, which really came all in one day! Outside of Thursday’s surge, the week saw arise of about 0.60%. While the inflation data out on Thursday was encouraging, it is still to be seen if PCE data mirror’s CPI. PCE is the preferred measure of the FRB. If the measure does come out favorable, then a less aggressive FRB should be expected heading into 2023. A less aggressive FRB should yield a better environment for equities.
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