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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Markets continued to see turbulence last week. Is there something to it, or a blip on the radar?
Monday
The week opened on a positive note as the S&P 500 shrugged off the prior week’s losses and gained 0.25% on the day. The advance was spear headed by an advance in commodity prices. This follows recent hurricane activity in the southeast.
Tuesday
Markets resumed the recent trend of falling. The S&P 500 shed 0.6% on the day, while bonds saw a safe haven bid. Core Consumer Price Index (CPI) rose by 4.0% YoY (Aug), slower than the 4.2% expected. Slowing inflationary pressure could be attributed to failing consumer sentiment but could also be easing supply side constraints.
Wednesday
The seesaw continued as markets rose sharply on Wednesday. Sharpley is relative, as the rise was 0.9%; as of late changes in value of more than 0.5% have become sharp moves. VIX is supposed to be forward looking volatility for the next month. When VIX is at 20 (currently) that would imply an expectation that moves will be less than 1%/day.
Thursday
Retail sales unexpectedly jumped, which caused a down day for equities. This is a continuation of the good news is bad news that has been occurring as of late. Unemployment data was also released on Thursday showing that initial jobless claims increased from 312K to 332K. This was largely expected with regional hurricane activity tamping down job activity. So, it carried little impact on market activity.
Friday
The week ended with a stumble as all, but one major index (including bond indices) fell on the day. Consumer sentiment remained a tepid 71.0 in September. For frame of reference the lowest level during 2020 was 71.8 in April. The concern is that a weak consumer will lead to a weak economy as consumption makes up approximately 70% of economic activity.
Conclusion
It was a week to forget for markets as the S&P 500 fell for the second week. While the weekly loss was only a little more than a half percent, the fall from the peak is now about 2.5%. A true correction would be a 10% fall, which is still a long way off. Looming ahead, however, is a debt ceiling fight, variant news (always), the rest of hurricane season, consumption concerns, and a Federal Reserve Board (FRB) meeting this week. Nothing to see here…
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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.