Winter Is Coming The selling deluge continued with the S&P 500 losing 2.9% to finish at its lowest level since Christmas 2020. The storyline remained the same as the PCE, the Fed’s preferred inflation measure, rose a whopping 0.1% more than forecasters expected. Meanwhile, Fed officials on the speaking circuit (can they stop?) maintained their hawkish stance. There was some good news about the economy, as new jobless claims fell below [...]
Last Week The stock market treaded water until Wednesday afternoon’s extraordinarily hawkish Fed statement and Chairman Powell’s grim press conference opened the selling floodgates. By the closing bell Friday, the S&P 500 was down -4.7%, the Nasdaq -5.1%, and the Russell 2000 -6.6%. The Dollar surged to new highs, Crude Oil sank 7.2%, and the yield on the 10-year Treasury increased 21 basis points to reach its highest level since 2008 [...]
Inflationary Data vs. Deflationary Outlook The S&P 500 turned sharply lower, wiping out the previous week’s 3.7% gain plus another 1%, with a loss of 4.8% for the five-day session. The Nasdaq fared even worse, suffering a 5.5% decline, the Russell 2000 shed 4.5%, and all eleven sectors finished in the red. Most of the damage was done on Tuesday after a hotter-than-anticipated CPI report, with the headline print for August [...]
Weathering the Storm U.S. stocks snapped a three-week losing streak as the selling pressure abated and buyers, likely either bargain-hunting investors or short-covering traders, emerged. The market rose in three of the four sessions with only the oil and gas sector finishing in the red. The more aggressive indices fared the best with the Dow finishing the holiday-shortened week up 2.8%, the S&P 500 Index rising 3.6%, the Nasdaq shooting up [...]
Consensus Pessimism Drives Our Optimism We are beginning to embrace the saying that “no news is good news” since the market has been reacting negatively to both good news and bad news. This suggests a pessimistic consensus among financial markets participants, and any consensus rarely lasts in the financial markets. The economic data was quite positive with job openings data that exceeded consensus expectations, a stronger-than-expected ISM manufacturing PMI report, and [...]
Waiting on Wyoming The sell-off that started the previous Friday continued Monday, as concerns deepened over a more hawkish tone from Federal Reserve Chairman Jerome Powell on the upcoming Friday at Jackson Hole. The market treaded water on very low volume Tuesday and Wednesday, while Thursday brought a handsome rally. In less than ten minutes on Friday morning Chairman Powell delivered a knock-out punch to the optimist camp with the blunt [...]
Walmart Sales Up, Gas Prices Down The stock market rally ran out of steam, as the S&P dropped 1.2%, the Nasdaq declined 2.6%, and the Russell 2000 slid 2.9%. Most of the damage was on Friday, without any specific news to account for the mood swing. Of note, the market didn’t react on Wednesday when the minutes from the Fed’s July meeting showed that officials expected to continue to hike rates, [...]
The Rally Continues It’s getting better all the time Better (inflation) Better (consumer sentiment) Better (corporate earnings) Stocks rallied for the fourth straight week, with the S&P gaining 3.2%, the Nasdaq advancing 3.1%,and the Russell 2000 surging 4.9%. The party got rolling Wednesday after July’s consumer price index report showed a lower than expected 8.5% year-over year increase, suggesting that we may have indeed seen peak inflation. There was more good [...]
An Economy Off Life-Support After much reflection we have come up with the novel concept that good news is actually good news. On Friday, the Labor Department reported that the U.S. economy added 528,000 jobs in July, more than twice as high as expected, and the unemployment rate ticked down to 3.5%, matching the lowest level since the late 1960s. We think this report offers solid evidence that the economy is off [...]
A Shift Back to Dovish Against the backdrop of the Fed raising rates and a shrinking GDP, the stock market finished July with a flourish as the S&P 500 rallied 4.5%, the Nasdaq gained 4.7%, and the Russell 2000 advanced 4.3%. The Oil and Gas sector was the strongest performer, jumping 10.6% with energy prices reversing the recent downtrend after Russia’s Gazprom said on Monday that it would halve natural gas [...]