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 flashed a recession signal last week. Is the party over or do we still have room to grow?
Monday S&P 500 0.71% | NASDAQ 1.31%
The markets started the day and week in the green, but quickly faded as the 5-year and 30-year yields inverted. This means you could get more interest from a 5-year bond than a 30-year bond. This leads to fears of a recession. The key rate that would forward project a recession is the 2-year vs the 10-year (foreshadow). Markets bounced back late to end in the green as investor sentiment continues to support market valuations.
Tuesday S&P 500 1.23% | NASDAQ 1.84%
Markets rose, but it was in spite of some poor performance out of key categories. The Energy complex struggled as the shutdown of Shanghai, due to COVID testing, is taking a toll on demand. Optimism over a stock split in TSLA strengthened sentiment late in the day.
Wednesday S&P 500 0.63% | NASDAQ 1.21%
Russian demand for energy payments in rubles caused concern as sanctions have attempted to force a reduction of ruble use. Additionally, a classic signal for a future recession (6 to 24 months out) triggered. The 2-year vs the 10-year treasury rates inverted. The meaning can be seen that rate of growth beyond 2 years will be lower than current growth rates.
Thursday S&P 500 1.57% | NASDAQ 1.54%
Oil prices slid as another round of Ukraine/Russia talks gets underway. The US also announced a release of 1M barrels of oil per day from strategic reserves. Initial jobless claims rose last week and was an ominous foreshadowing of tomorrow’s job report.
Friday S&P 500 0.34% | NASDAQ 0.29%
Jobs Friday! Job data impressed as the unemployment rate fell to 3.6% and 431K nonfarm payrolls were added in March. The all-important participation rate moved a notch higher to 62.4%. So why didn’t the markets soar? The strength of the job market means the FRB is more likely to do a 0.50% rate hike in May. This pushed the 2-year yield over the 10-year yield again. As a classic sign of a coming recession (within the next 2 years) markets took the signal hard.
Conclusion S&P 500 0.06% | NASDAQ 0.65%
Though the intra-week volatility was elevated, markets ended the week slightly unchanged. The Nasdaq edged higher than the S&P 500 as bonds flashed a classic recession signal for the future. Inversion of the yield curve happens more than just leading into a recession; however, it precedes every recession. The last two times it has happened, the S&P 500 has grown pretty substantially for the 12 months. So, even if the signal is right, the party is not quite over. Think of it as last call…
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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.