Next Move…| March 1, 2024

AUTHOR: Jason Roque, CFP®, APMA®, AWMA®
TITLE:   Investment Adviser Rep – CCO
TAGS: S&P 500, NASDAQ, housing, earnings, GDP, PCE, Manufacturing

Markets advanced on the week, but was there a tell about the Federal Reserve’s next move?

Monday                      S&P 500 0.38% | NASDAQ 0.13%

Markets were little changed on the day. Housing data was mixed as building permits grew more than expected, however New Home Sales came in sluggish. Six major companies reported earnings with four missing expectations. Much of this week carries data that will be relevant to assessing the next Federal Reserve Board (FRB) action.

Tuesday                       S&P 500 0.17% | NASDAQ 0.37%

Consumer Confidence and core durable goods orders slipped. 18 major companies reported earnings with six missing expectations. The data signaled some weakness that if pervasive could signal a rate cut sooner than later. That is a big if…

Wednesday                 S&P 500 0.17% | NASDAQ 0.55%

Seven major companies reported earnings with two missing expectations. GDP data for the fourth quarter showed the economy expanding at 3.2%, slowing from the previously estimated 3.3%. The weaker economic data, however, did not prove fruitful to markets, as it would signal a more accommodative FRB.

Thursday                     S&P 500 0.52% | NASDAQ 0.90%

Personal Consumption Expenditures (PCE) showed continued success in reigning inflation in. Headline PCE fell to 2.4%, while Core PCE came in at 2.8% (January). 10 major companies reported earnings with none missing expectations. The inflation data was encouraging as the PCE gauge is the preferred gauge of the FRB. Being within 1% of both headline and core inflation (which should take longer) could signal FRB rate cuts sooner. They are currently projected for July.

Friday                          S&P 500 0.80% | NASDAQ 1.14%

ISM Manufacturing data and Atlanta’s Fed GDPNow  readings showed weakness in the 1st quarter. Growth stocks led the way to close out the week, in what was a tech fueled rally. Weaker GDP expectations further build the increasing narrative of a FRB rate cut, which would most benefit growth stocks.

Conclusion                  S&P 500 0.95% | NASDAQ 1.74%

Markets expanded for the week with Growth stocks leading the way. The earnings season is drawing to a close, but there was plenty of economic data. The flurry of news signaled a weakening economic environment, but not drastically. It was enough to induce growth due to the belief that a soft landing is achievable in this environment. This week holds a slew of jobs data as well as services PMI and factory orders. All of which will carry meaning for the FRB’s next move.

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