Deja Vue, or Something Different? | July 21, 2023

AUTHOR: Jason Roque, CFP®, APMA®, AWMA®
TITLE:   Investment Adviser Rep – CCO
TAGS:   S&P 500, NASDAQ, FRB, Retail Sales, Earnings

Tech lagged last week, like 2022. Was this Deja Vue, or something altogether different?

Monday                     S&P 500 0.36% | NASDAQ 0.91%

Earnings were in focus early. They led to a strong day of gains for tech and financials alike. Growth may have been slightly hampered by concerns of inflation as the Black Sea grain deal has not been extended. This causes concerns for food inflation in the near future. The Federal Reserve Board (FRB) will be meeting next week, and this will surely apply pressure to rates.

Tuesday                       S&P 500 0.71% | NASDAQ 0.76%

Retail sales missed expectations; this would typically signal weaker markets as it means weaker earnings. As a result of the proximity to the next Federal Reserve Board (FRB) meeting it means the opposite. Weaker retails spending signals less inflationary pressures and less need for a rate hike.

Wednesday                 S&P 500 0.24% | NASDAQ 0.03%

Stocks stayed in the green all day, albeit modest gains. Financials as a sector performed well on the day, as did financial giant, Goldman Sachs. They missed earnings expectations, but this was them baking expected losses for coming quarters. This makes markets edgy, but for their stock specifically, it should indicate opportunity.

Thursday                    S&P 500 0.68% | NASDAQ 2.05%

Earnings data from Tesla and Netflix ruled the day. Tesla announced narrower margins than expected. They also warned about third quarter production. Meanwhile, Netflix acknowledged the economic pain they could feel because of the SAG strike.

Friday                         S&P 500 0.03% | NASDAQ 0.22%

Equity markets were mixed on Friday. Defensive stocks led the way higher, while the darling tech sector struggled throughout the day. Tech has been the biggest winner of the year, however through this week of earnings they struggled.

Conclusion                  S&P 500 0.70% | NASDAQ 0.60%

The week ended much different than it has as of late. Financials rallied throughout the week while tech slumped. This very much feels like 2022, where FRB rate hikes stifled the tech sector and promoted growth in the financial sector. This may be in response to expectations of a rate hike later this week, but a 0.25% in comparison to 5% in hikes are two totally different things. The tech issues throughout the week were likely focused squarely on earnings misses. Still expect tech leadership as earnings season carries on.

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