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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It was a wild ride last week. As it came to a close, markets were pointing north, but will this endure?
Monday
Markets opened the week sharply lower on Monday, with all major equity indices losing around 2% on the day. This brings the S&P 500 fall from peak, now 4.5%. This came as concerns worsened that a default by China’s Evergrande was likely on Thursday.
Tuesday
The S&P 500 came out of the gates hot as buyers attempted to ‘buy the dip’. This did not last though as markets faded into the close and the S&P 500 managed to end breakeven. Typically, it is a good sign to see investors buy back half the losses from the prior day. As it shows a purchasing appetite. That lack of appetite may be a waning after a summer of feasting.
Wednesday
Markets rose beyond VIX expectations on Wednesday. This came as Evergrande came to a deal that would help them avoid defaulting on Thursday. Additionally, the Federal Reserve bank (FRB) completed their two-day meeting. Dot plots show increased risk of rate increases in 2023. The FRB also announced that they will begin tapering later this year. In prior meetings they stated they will be discussing it, so this is a dramatic shift.
Thursday
The rise continued through Thursday as investors appeared to applaud the FRB’s effort to tighten monetary policy… Not a sentence I ever expected to write. What it does, however, is set expectations and create predictability.
Friday
The Markets ended the week mixed. The S&P 500 rose, however capping a very active week for the market. In what was a busy week for housing, we learned that new home sales rose 1.5% for August on Friday.
Conclusion
This last week started with a gash to the bottom line as markets opened the week sharply lower. Clawing its way back into the green, the S&P 500 actually rose by 22 points (or 0.5%) for the week. Regardless of how the numbers ended for the week, volatility is notably higher the last few weeks. We started the month at 16 and have ranged between 18 and 26 in September. The month is not over and more may be on tap as focus on the debt ceiling heats up.
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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.