Insights Weekly Research Briefing
Will this month's rain bring May flowers? We will find out over the next two weeks as 2/3'rds of the S&P 500 will be reporting their earnings and outlooks. Without any relief from interest rates, inflation and the global political situation, it is going to take a stellar set of numbers from the market leading companies to return the indexes to their March highs.
Continued economic strength combined with last week's 'hot' CPI figures have sent Treasury yields 30-40 basis points higher over the last two weeks. Equity markets are fine with small doses of rising yields tied to economic upside, but more than that and stock prices begin to get a fear of heights.
While many await a slowdown, the U.S. economy laughs and shifts into a higher gear. Last week's surge came as a result of Friday's monthly jobs data which showed accelerating job production and tepid wage growth.
Joining the crocus in reaching for the sky last week were the equity markets which moved to new highs for the quarter end. Back-to-back double-digit percentage gains for the S&P 500 is not a frequent event and last happened in March of 2012.
We are so back that you can hear Mark Knopfler and Sting singing in the background... "Get your money for nothing. And your chicks for free."
The financial markets are also enjoying a multi-phase period of time where investors' appetite for assets is large, and companies are increasingly open to fixing balance sheets and transacting operational assets.
The markets are off and running now. Big and small. U.S. and International. Low risk, but now shifting toward higher risk. 20-day new highs are breaking out across the market.
If you need any further proof that the stock market is now focused on earnings, NVIDIA just gave it to you. Not only were the company's results incredible, but the full earnings digestion gave investors a further look into just how big the AI data market could become.
Today's financial markets are also operating in a world that is less and less frozen every day. As you look at the news across the tape, in any newspaper or on any financial news network, you will see a system getting more liquid every day.
The S&P 500 moves through 5,000, the NASDAQ hits 16,000, and the Dow Jones Industrials is eyeing 40,000. Those are some landmark levels advertising that investors are hungry and want to be fed. What were the catalysts last week?
Last week was a big one for data (economic and earnings) as well as an update from the Fed. The full week of strong earnings and economic reports would have given the market enough to scratch its head about a March Fed rate cut.