 | AUTHOR: Jason Roque, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Nvidia, Banks, FRB |
There was green on the screen for the first time in August! Will it continue or was this a flash in the pan?
Monday S&P 500 0.69% | NASDAQ 1.56%
Markets pushed higher to open the week. Led by the chip sector in anticipation of Nvidia earnings due out on Wednesday. There was little on the economic calendar for the day, allowing markets to look ahead.
Tuesday S&P 500 0.28% | NASDAQ 0.06%
Equity markets opened in the green but faded as it went through the day. S&P downgraded several banks pushing markets lower. The main banks affected were regional banks with lower yields. The return of high yield savings caused oversized outflows from some regional banks.
Wednesday S&P 500 1.11% | NASDAQ 1.59%
Markets surged throughout the day on Wednesday. It was an anticipatory move for Nvidia earnings due out after the bell. Nvidia has been the face of the AI movement that has been the center of markets attention for 2023.
Thursday S&P 500 1.35% | NASDAQ 1.87%
Durable goods orders came in stronger and initial unemployment claims came in weaker than expected. Markets posted losses offsetting the gains from Wednesday. This was likely a pre-emptive move based on FRB’s Powell speaking on Friday.
Friday S&P 500 0.67% | NASDAQ 0.94%
Markets opened much as they had closed on Thursday. Equities pushed higher as the day progressed. Consumer sentiment came in lighter and 5-year inflation expectations came in stronger than expected, but still rooted firmly at 3%. Weaker sentiment signals that a weaker consumer ahead would justify a lighter load when it comes to future rate hikes. The Federal Reserve Bank (FRB) Chair, J. Powell, spoke at Jackson Hole and continued his hawkish stance on monetary policy. This did not deter markets. Ultimately, markets closed in the green for the day and the week.
Conclusion S&P 500 0.82% | NASDAQ 2.26%
The markets rose for the week for the first time since July. Nvidia stole the earnings show on the week, but unfortunately the FRB always steals the whole show. The Hawkish tone from the FRB sent a message that at least one rate hike should be expected shortly. The short-lived momentum from Nvidia will likely be just that. In the near-term a hawkish FRB will persist longer than an earnings report.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION: If you would like to receive this weekly article and other timely information follow us, here. 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.
There was an onslaught of data last week, which led to gains. Should more be expected with the coming earnings season?
Monday S&P 500 0.27%| NASDAQ 1.09%
ISM Manufacturing unexpectedly slipped and remains in contractionary territory. The weaker economic data would typically signal lower rates as rate cut expectations would increase. To the contrary, 10-year treasuries rose on the day. In the face of weak economic data, the start of the quarter brought optimism towards the next three months.
Tuesday S&P 500 0.62% | NASDAQ .84%
JOLTs job openings rose more than expected to 8.14M openings. For perspective, there were 6.6M unemployed as of the May report. The strong jobs data did not deter markets, though; this may be because the Federal Reserve Board (FRB) Chair, J. Powell, spoke on the day. He indicated that progress is being made towards their inflation target. This is the ‘secret sauce’ needed to justify future rate cuts.
Wednesday S&P 500 0.51% | NASDAQ 0.88%
Initial jobless claims rose for the week to 238K from 234K; the level remains elevated, albeit from all-time lows. Factory orders unexpectedly slipped into the negative on the month. Additionally, ISM Services unexpectedly slipped into contractionary territory. This is all bad news for economic production, so why did the markets rise? Interest rates fell as this data increases the likelihood that the FRB will lower rates sooner than expected. The heightened odds are now calling for a .25% cut in September and December, according to CME FedWatch.
Thursday S&P 500 -% | NASDAQ -%
Happy Independence Day!
Friday S&P 500 0.54% | NASDAQ 0.90%
Happy Jobs Friday! The unemployment rate rose to 4.1%, Nonfarm payrolls beat expectations, and participation rose to 62.6% from 62.5%, all for June. The unemployment rate went up even though we added 206K jobs??? Participation went up so, with more people in the market, the rate can go up even as jobs are added. This is a positive signal that workers are returning to the work force. The rise on equity markets, however, was on hopes that economic weakness would be enough for an FRB rate cut.
Conclusion S&P 500 1.95% | NASDAQ 3.55%
This was a busy week for economic data, especially for a holiday shortened week. We got weaker Jobs, manufacturing, Services, and Factory orders. The weakness led to stronger markets on hopes the FRB will cut rates BEFORE a recession can materialize. The coming week starts second quarter earnings. Valuations are stretched (S&P 500 P/E: 28.94) and economic production is weak, very little should be expected from this season. This could be the start of volatility that would lead into the Autumn.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
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.