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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The bears are asserting themselves right now. Will the bulls be back this week to fend off the Bearish trend?
Monday
Happy Martin Luther King Jr. Day!
Tuesday
Markets opened the week as they had the prior week. Volatility was up and markets were down early! One concern was the potential for flight disruptions as wireless carrier giants roll out 5G near airports. The use of 5G has companies utilizing airwaves that had previously not been used. The concern being that they could provide potential interference for airlines.
Wednesday
The S&P 500 opened higher on Wednesday, but quickly faded into the red. At the open, equities were higher and fixed income was higher as well. Typically buying in fixed income is viewed as a defensive move. The equity sell-off that occurred into the close did not get accompanied by a sell-off in fixed income. Those continued to gain. This is a signal of perhaps a more bearish trend to come. The S&P 500 ended up losing 0.97% on the day. The NASDAQ, which lost 1.15% on the day, entered technical correction territory (being down more than 10% from it’s high). The S&P 500 is off 5.5% from it’s high on January 3rd.
Thursday
Markets opening strongly in the green. The S&P 500 was up more than 1.5% early on. Markets began to fade around 12:30PM EST and never looked back. The S&P 500 ended up falling 1.19% and the NASDAQ led the way, down 1.39%. Most of the losses came in the final hour of trading.
Friday
Movement within markets continued into the red on Friday, simply reinforcing the action from the entire week. Interest rates at the 10-year level fell. This is a more traditional reaction to an equity sell-off. The S&P 500 ended up dropping another 1.89%. The Nasdaq continued to lead the way, being down 2.72%.
Conclusion
The S&P 500 lost 5.68% last week and is down 8.31% from its January 3rd closing high. The Nasdaq 100, which has more growth focused positions, lost 7.49% last week and 12.88% from its November high. The controlled nature of this sell-off tends to reflect a more measured corrective environment. With the Federal Reserve Board meeting next week, all eyes will be on interest rates!
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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.