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.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
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.
Bear territory was reached Friday, signaling a sustained rangebound period. Does it mean something else this time?
Monday S&P 500 0.40% | NASDAQ 1.21%
Markets swung between losses and gains throughout the day. Towards the end of the day, it became decidedly negative, closing out in the red. There was very little economic data to swing the markets one way or the other.
Tuesday S&P 500 2.02% | NASDAQ 2.76%
The jump in markets came on the back of strong retail sales. There was a fear that retail sales would weaken on strong inflation data; however, the consumer remained strong. Capacity utilization also came out yesterday at 79%. The signal tells investors of tighter economic conditions, which lend themselves to inflation when the rate is in the 80’s.
Wednesday S&P 500 4.04% | NASDAQ 4.73%
Equities continued their march lower on Wednesday. The S&P 500 broke through the psychological floor of 4000 points, but that level carries little factual weight. Housing data showed future weakness for new home sales. Additionally, oil inventories fell unexpectedly. Oil markets were up early on the news; however, they faded as the equity sell off gained steam. The main catalyst to the selloff was reports from Walmart, Target, Home Depot, and Lowe’s that detailed consumer buying behaviors. The big box stores indicated that consumer activity has shifted to more conservative buying. To the contrary, the home improvement stores have indicated no such change that consumption is showing strength.
Thursday S&P 500 0.58% | NASDAQ 0.26%
Quite often, following a market sell off, we will see a bounce the following day. Not on Thursday… Equities oscillated between gains and losses throughout the day, ultimately landing slightly lower. The S&P 500 is off approximately 19% from its high. It is inching ever closer to bear market territory (20% fall from recent highs).
Friday S&P 500 0.01% | NASDAQ 0.29%
Markets opened in the green in reaction to lending rates in China being eased. That faded quickly and the S&P 500 pushed down about 1.4%. This brought the index to 20% down from it’s high. Late in the day, markets rallied to end unchanged.
Conclusion S&P 500 3.05% | NASDAQ 3.82%
The S&P 500 fell 20% from their January highs. The significance of this is that a fall of 20% marks a bear market. During recessions, this is a market where rallies will occur (markets hang lower rather than putting in new highs). Bear markets in expansions frequently are short-term swings of losses rather than sustained down periods. At the end of 2018, we hit bear market territory and markets proceeded to rally capturing new highs throughout 2019. This may be a recent point, but it does give us hope that the storm may be almost over.
~ Your Future… Our Services… Together! ~
Your interest in our articles helps us reach more people. To show your appreciation for this post, please “like” the article on one of the links below:
FOR MORE INFORMATION:
If you would like to receive this weekly article and other timely information follow us, here.
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.