 | AUTHOR: Jason Roque, CFP®, APMA®, AWMA® TITLE: Investment Adviser Rep – CCO TAGS: S&P 500, NASDAQ, Earning, GDP, Rates, PCE |
Equities advanced and the economy looked strong in the fourth quarter. Does this mean there is hope for the first quarter?
Monday S&P 500 0.22% | NASDAQ 0.32%
Monday was a light earnings day as two of the three major companies reporting beat both earnings and revenue expectations. Interest rates fell back on the day after rising all last week. This gave some breathing room to equities which advanced on the day.
Tuesday S&P 500 0.29% | NASDAQ 0.43%
Tuesday saw 17 major companies report earnings, with 82% of them beating expectations. Additionally, crude oil inventories fell far more than expected last week. Oil prices slumped and equity prices continued to gain.
Wednesday S&P 500 0.08% | NASDAQ 0.36%
Earning season rolls on with 25 major companies reporting on Wednesday. 80% of those companies met or beat expectations. Additionally, mortgage rates are hovering around 6.75%. They moved there in December and have remained around this level. Markets continue to vary their thinking as to how many rate cuts to expect from the Federal Reserve Bank (FRB).
Thursday S&P 500 0.53% | NASDAQ 0.18%
22 major companies reported earnings on Thursday with 63% of them beating expectations. This was down from earlier in the week which was showing a far more favorable pace for the fourth quarter. Equities still advanced strongly as GDP impressed at 3.3% when 2% was expected. Building permits and new home sales showed signs of life in the housing market as well.
Friday S&P 500 0.07% | NASDAQ 0.36%
Friday was a light day for earnings as two of the three companies reporting missed expectations. Interest rates firmed to close out the week. This was not shocking with the FRB meeting next week. Core durable goods orders improved more than expected and Core PCE came in lower than expected at 2.9%.
Conclusion S&P 500 1.06% | NASDAQ 0.94%
Markets advanced for the week, albeit a mild gain. Earnings season is well underway and that has provided some much-needed distraction from the FRB. That focal point returns this week as they meet Tuesday and Wednesday with little expectation of action. Leading into the meeting the US economy shows strength as GDP came in well above estimates of 2%, at 3.3%. Further, the early estimates for the first quarter are coming in at 3%. This is quite often the weakest quarter of the year for the economy, so expect that figure to deteriorate. The FRB will likely come out with a hawkish tone to continue to hold accommodation at bay. It will additionally cause investor expectations to align further with FRB models. Those models show three cuts for 2024.
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