Markets grew for the week for the first time in a month. Is it a reason to celebrate or a breather in the pullback?
Monday S&P 500 0.87% | NASDAQ 1.11%
Nine major companies reported earnings, with two missing expectations. Equities jumped to open the week. Outside of earnings data there was not much to support the rally. It was likely a jump on three consecutive weeks of down market, creating better by opportunities.
Tuesday S&P 500 1.20% | NASDAQ 1.59%
35 major companies reported earnings, with five missing expectations. Housing data came in better than expected. The heavy earnings data drove markets higher on Tuesday, pun intended. GM (GM) and Tesla (TSLA) were among reporters that helped propel markets.
Wednesday S&P 500 0.02% | NASDAQ 0.10%
40 major companies reported earnings, with six missing expectations. Core durable goods orders came in lighter than expected. Strong earnings data was counter-balanced by higher rate expectations. This left markets fairly unchanged.
Thursday S&P 500 0.46% | NASDAQ 0.64%
60 major companies reported earnings, with 13 missing expectations. GDP grew at a much slower pace than expected(1.6% vs 2.5%). Unemployment data continued to show strength. GDP and forward guidance from Meta (META) spooked markets early. They managed to climb halfway out of the hole that was dug as the earnings flowed in throughout the day.
Friday S&P 500 1.02% | NASDAQ 2.03%
13 major companies reported earnings, with five missing expectations. Consumer sentiment softened in April. Core Personal Consumption Expenditures (PCE) held steady at 2.8% in March. This is the Federal Reserve Board’s (FRB) preferred gauge of inflation. Between PCE data and earnings from Alphabet (GOOG) and Microsoft (MSFT) markets surged on the day.
Conclusion S&P 500 2.67% | NASDAQ 4.23%
The markets experienced a strong bounce back this last week in comparison to the last three weeks. Do not be fooled. Markets have a way to go to recapture highs as the growth did not even recover from the prior week. This indicates that there is room for markets to continue the run up as earnings season wears on. There are major hurdles this coming week with the FRB meeting, Jobs data, and Apple (AAPL) reports earnings.
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Growth or inflation, which will command the interest of investors? Did you see what I did there???
Monday
The movement for the day was generally in the green. This came off weekend news that the senate passed the $1.9T stimulus package. It is now headed back to congress to ratify the modifications. Late it the day interest rates surged (for the same reason) as concerns around inflation increased. This surge caused the rally to fade, and markets ended the day in the red.
Tuesday
Markets surged strong on Tuesday. Led by the NASDAQ, sending a sign that there may have been too much made of the recent inflation trade. The S&P 500 rose 1.84%, while the NASDAQ posted its strongest single day gains since November.
Wednesday
Oil inventories rose more than expected and Consumer Prices rose less than expected. Markets climbed early on the better than expected inflation data. They held onto those gains through the close.
Thursday
Markets rose on Thursday with the S&P 500 rising 1.05%. The NASDAQ, however led the way at 2.51%. Jobless claims fell to the lowest level since December. Additionally, Job openings were higher and showed promise.
Friday
The interest rate environment was back in focus as rates climbed Friday morning. With that markets started the day deep in the red. They spent the day digging out of the whole and finished in the green. A good sign, as investors felt comfortable being long the market heading into the weekend.
Conclusion
This last week was a strong week for markets, with the S&P 500 rising 2.64% on the week. While caution still exists around interest rates, markets seemed to have realized that the rising rates as a result of rapid growth expectations was actually a good thing. The anticipated inflation risks are expected to be transitory, fading by early 2022.
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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.