Busy Signal | May 3, 2024

Markets were busy with plenty of data. Did the end of April give us any signal into how May could perform?

Monday                      S&P 500 0.32% | NASDAQ 0.35%

11 major companies reported earnings, with two companies missing expectations. Stocks opened a busy week in the green. The optimism is welcomed after what has been a tough April. The hurdle this week might be fairly high to end in the green. A large swath of corporate earnings hit, the Federal Reserve Board (FRB) is meeting, and the Jobs report comes out.

Tuesday                       S&P 500 1.57% | NASDAQ 2.04%

47 major companies reported earnings, with eight companies missing expectations. Home prices advanced in February, however consumer confidence slipped in April. Markets shed serious weight on the Tuesday leading up to the FRB meeting. Rates moved higher as expectations of a rate cut for 2024 continued to fade. This ended an April that was marked with an S&P 500 pullback of 4.2%.

Wednesday                 S&P 500 0.34% | NASDAQ 0.33%

52 major companies reported earnings, with 15 companies missing expectations. ISM Manufacturing data moved into contractionary territory. JOLT’s job openings fell in April. Markets were hovering down about 0.30% to 0.50% before the FRB meting completion. The FRB left rates unchanged, ruled out rate hikes, and initiated a slowdown of its Quantitative Tightening (QT) program. They intend to slow the reduction of their balance sheet by $40B a month. The news sent markets higher by over 1% until about 30 minutes before close. At that point, all the gains came off the table and we closed slightly lower.

Thursday                     S&P 500 0.91% | NASDAQ 1.51%

57 major companies reported earnings, with 11 companies missing expectations. Initial jobless claims remain subdued leading into an important jobs report. Factory Orders expanded more than expected in March. Interest rates softened on the day as markets processed the fact that the FRB will not raise rates this year. This accommodation, coupled with a heavy swath of earnings data gave us a day well into the green.

Friday                          S&P 500 1.26% | NASDAQ 1.99%

Happy Jobs Friday! Average hourly earnings came in weaker than expected. Nonfarm payrolls came in nearly half of what was expected. Unemployment rose to 3.9% in April. Excluding COVID, this was the highest reading since February of 2019. 5 major companies reported earnings, with one company missing expectations. The post FRB meeting rally continued into Friday. The jobs data out showed both slowing signs of inflation with softer wage data and a weaker jobs market. This was something the FRB referenced Wednesday that could prompt a reaction, should the data deteriorate.

Conclusion                  S&P 500 0.55% | NASDAQ 1.43%

The FRB meeting provided assurances that a rate hike was unlikely. Their effort to reduce QT in coming months is a welcome signal of a less restrictive environment. The FRB also noted that conditions have changed where Inflation is not its soul focus. Its proximity to the goal is close enough for employment to carry more weighting to their equation. This is why Friday’s softer job data (while a signal of weakness) was welcomed. It may indicate that two rate cuts are still on the table for 2024, albeit late cuts. As we move into May, earnings season wraps up and April’s losses may give prices some room to run up. This could help us avoid a ‘sell in May and go away.`

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