Markets sold consistently across the week. Is there more red to expect in coming weeks?
Monday S&P 500 1.20% | NASDAQ 1.79%
Happy Tax Day! Retail sales expanded more than expected in March. Three major companies reported earnings, all three met expectations, all of which were financials. This was not surprising as financials usually head up earnings season. They also give us a good indication of how earnings season should go. Retail sales, however, took center stage as a strong consumer reduces the need for Federal Reserve Board (FRB) rate cuts. This caused an outsized move downward as investors anticipate less stimulus for 2024.
Tuesday S&P 500 0.21% | NASDAQ 0.12%
Housing data for March came in weaker than market expectation. Ten major companies reported earnings, with two missing expectations. Although mild, the losses continued. FRB Chair Powell indicated that inflation’s recent strength does not give the board confidence to start easing policy.
Wednesday S&P 500 0.58% | NASDAQ 1.15%
11 major companies reported earnings on the day, with three missing expectations. Focus was squarely on earnings as there was little economic data on the day. Tech stocks took a hit as AI chip orders for a specific company did not meet expectations. As would be expected this hit the tech heavy NASDAQ harder than the S&P 500.
Thursday S&P 500 0.22% | NASDAQ 0.52%
Initial unemployment claims remain benign. Existing home sales also slowed in March. 11 major companies reported earnings on the day, with one missing expectations. Markets were down for the day, but in a less dramatic fashion. Robust employment data typically is not favorable information when hoping for an FRB rate cut (as investors are).
Friday S&P 500 0.88% | NASDAQ 2.05%
Six major companies reported earnings on the day, with one missing expectations. NASDAQ led the way lower as Tech and communications got hit hardest. The best performers on the day were defensives, like utilities, healthcare, staples, and also financials.
Conclusion S&P 500 3.05% | NASDAQ 5.52%
The week was bloody. There was not a single up day for the S&P 500 or the NASDAQ Composite. The moves were not founded in fundamental data, as earnings did well. Some forward guidance shows warning of slowing revenues throughout the year, but that is normal for the last two years. Economic data, which signals the economy is doing well, has actually pushed stocks lower. The stronger the economy, the less likely the FRB is to act in reducing rates. The sell-off has extended to approximately 6%. It may take a breather in the coming days but expect that we are not done.
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Markets rose for the week. Is the strength sustainable, or in bear market form, will the numbers fade?
Monday S&P 500 0.10% | NASDAQ 0.10%
Tech stocks weighed on the Monday trade as Chip maker Nvidia gave negative forward guidance. Additionally, trading signaled a more aggressive Federal Reserve Bank (FRB) off the back of the strong July Jobs report.
Tuesday S&P 500 0.42% | NASDAQ 1.19%
Markets opened down on the day and stayed there. They never deviating too far from where they started. NASDAQ led the losses lower. After three weeks of gains, markets were taking a breather leading up to Consumer Price Index (CPI) data released Wednesday.
Wednesday S&P 500 2.13% | NASDAQ 2.89%
CPI data surprised to the lower bound. Expectations were for inflation to fall from 9.1% to 8.7%. It actually came in at 8.5%. Core CPI (which strips out food & fuel) held steady at 5.9% when it was expected to rise to 6.1%. The weaker than expected CPI data yielded strong performance from the markets. The more inflation concerns subdue, the less interest rate hikes from the FRB are expected.
Thursday S&P 500 0.01% | NASDAQ 0.58%
Producer Price index (PPI) surprisingly fell to 9.8% in July from 11.3%. This data is usually higher than CPI data so while elevated, the reduction was welcome. Markets opened in the green but faded to flat by the close.
Friday S&P 500 1.73% | NASDAQ 2.09%
Consumer Sentiment projected to surprise to the upside this month. The estimate has risen to 55.1 where 48.4 was expected. Both readings are low, but a 5-point increase is encouraging. Markets rose dramatically to close the week.
Conclusion S&P 500 3.26% | NASDAQ 3.07%
The rallies on Wednesday and Friday brought us to 4 straight weeks of gains for the market. It is to be remembered that this is still a bear market. While the gains have been nice, they could be notoriously poached quickly. Conversely the wide number of positions in the green does signal good underlying strength to the current rally.
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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.