 | 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.
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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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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.