Driving Force of Markets | Feb 2, 2024

AUTHOR: Jason Roque, CFP®, APMA®, AWMA®
TITLE:   Investment Adviser Rep – CCO

The week landed in the green again! Is the driving force of that landing sustainable?

Monday             S&P 500 0.76% | NASDAQ 1.12%

This is a busy week for markets, and they started the week with a bang. The S&P and the NASDAQ both advanced strongly on the day. On tap this week are major earnings reports, the Federal Reserve Board (FRB) meeting, and the monthly Jobs report. Monday was the thinnest data day of the week; so, the trade was mainly anticipatory.

Tuesday                       S&P 500 0.06% | NASDAQ 0.76%

JOLTs job openings rose to 9.026M in December, but that was not moving markets for the day. 31 Major companies reported earnings, with only three of those companies’ missing estimates. While earnings were hitting, forward guidance was setting the table for a different story. Markets slipped on the day as a result.

Wednesday                  S&P 500 1.61% | NASDAQ 2.23%

Markets were little changed until the results of the FRB meeting came out. When asked about a March interest rate cut, FRB Chair, Jerome Powell, indicated it was not the base case scenario. This sent markets reeling. It reset expectations to a more appropriate May 1st rate cut. If the economy continues to return mildly strong numbers, the first cut may not come until June 12th.

Thursday                     S&P 500 1.25% | NASDAQ 1.30%

Markets opened the new month in the green. 35 major companies reported earnings, with only three missing expectations. The rebound from Wednesdays bludgeoning was absolutely welcome! Additionally, economic data came in better than expected for manufacturing, construction spending, and first quarter GDP projections.

Friday                          S&P 500 1.07% | NASDAQ 1.74%

Happy Jobs Friday! Was it ever. Between a strong jobs report and earnings Thursday afternoon from Amazon (AMZN), Apple (AAPL), and Meta (META), markets closed strongly. The jobs report delivered an unchanged unemployment rate, but also doubled the number of nonfarm payroll jobs that were expected. Strength in the job market is welcome news, but also diminishes chances of an FRB rate cut in March.

Conclusion                  S&P 500 1.38% | NASDAQ 1.12%

While we ended the week in the green it was a wild ride getting there. The increased volatility associated with the last three trading days of the week worries me. Common place market moves above 1% increase the risks to the market. Hopefully those decrease as we pass the majority of “Magnificent Seven” earnings (AAPL, AMZN, META, MSFT, GOOGL, NVDA, TSLA). Looking ahead, this week is light on economic data, but heavy on earnings. Look for that to fuel market moves.

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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.