S&P 4000 | April 2, 2021 | FFS

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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S&P 500 crossed 4,000 points last Thursday. The number is insignificant, but does the growth have meaning?

Monday

The trading week opened consistently in the red. Led mainly by a margin call on a large family office for $20B. The event calls to light a hole in the communication between prime brokerages regarding client account holdings.

Tuesday

Markets hovered mildly in the red all day. They ended there with very little change. House prices rose an exceptional 12% over the year ending January. Also, CB consumer confidence rose to 109.7, the highest level since March of last year. This data was not enough to get the markets off the mat.

Wednesday

The S&P 500 managed to rise 0.5% on Wednesday. Aided by ADP payroll data that showed slower than expected job adds. They were substantial, just not as great as expected. This eased some inflationary concerns. Additionally, details around an infrastructure package may have had an impact on shares.

Thursday

A growth rally ensued on Thursday (this week’s Friday), as interest rates softened. This strength was very encouraging as we move into the weekend with investors wanting to be long the market. Even with growth leadership, the S&P 500 managed to close above 4,000 points for the first time ever.

Friday

Good Friday!

Conclusion

The buy trend to close the week was more meaningful than usual. While the markets were closed on Friday, the government was not. They still released the all-important Jobs report on Friday. A report that drives trading every month upon its release. The buy trend indicated investors thought it was going to be good, but not that good, fending off inflation concerns. This should send a buy signal into the start of this week as well.