Financial Consultant Santa Barbara, Kip Lytel CFA

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of November 2024 I Montecito Capital Management

11/1/2024

November 30, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In the holiday-shortened trading week, the Dow recorded a gain of 1.4%, while the S&P 500 and Nasdaq both increased by 1.1%. This rebound in the major indices followed a downturn in October, spurred by positive sentiment regarding Donald Trump's decisive win in the early-November presidential election. The S&P 500 and Dow Jones wrapped up November with notable monthly increases of 5.7% and 7.5%, respectively, marking their most significant one-month gains of the year. The Nasdaq Composite also saw a rise of 6.2% this month, representing its best performance since a 6.9% increase in May. Traders are anticipating a 25 basis point reduction in borrowing costs by the U.S. central bank at its December meeting, although they expect a halt in rate cuts in January, according to the CME Group's FedWatch.

November 15, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. This week, all three major indexes experienced declines. The Dow Jones Industrial Average fell by 1.2%, while both the S&P 500 and Nasdaq recorded their largest weekly drops since September, decreasing by 2.1% and 3.2%, respectively. The most significant losses were observed in the technology sector, as investors reacted to disappointing earnings reports and concerns regarding the sector's vulnerability to rising interest rates. Federal Reserve officials indicated that further rate cuts next month may not occur as previously anticipated. Notably, on Friday alone, the market capitalization of the six most valuable companies in the S&P 500—Nvidia, Apple, Microsoft, Amazon, Alphabet, and Meta—dropped by $458 billion. Both Amazon and Nvidia saw their market values decline by over $90 billion each. Additionally, major pharmaceutical companies such as Moderna, Pfizer, and AstraZeneca faced declines on Friday following the nomination of Robert F. Kennedy Jr., a vaccine skeptic, by Trump for the position of health and human services secretary. Although retail sales data released early Friday exceeded expectations, suggesting positive economic conditions, it also reinforced the notion that the Federal Reserve may not be as aggressive in reducing its benchmark interest rate as some investors had hoped. Federal Reserve Chair Jerome Powell noted on Thursday that ongoing economic growth, a robust job market, and inflation rates above the central bank's 2% target justify a cautious approach to future rate cuts.

November 8, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 briefly crossed the 6,000 level and finished the week with its largest weekly percentage increase in a year, spurred by Donald Trump's election win and the prospect of a Republican sweep in Congress, which raised hopes for favorable business policies. For the week, the S&P 500 recorded a gain of 4.66%, the Nasdaq rose by 5.74%, and the Dow increased by 4.61%. Trump's election as President of the United States ignited a significant rally in the dollar, drove stock indices to all-time highs, and negatively impacted bond prices, as expectations for tax cuts and tariffs on imports fostered optimism regarding economic growth while also raising inflation concerns. The anticipated deregulation, tax reductions, and growth-oriented policies were pivotal in the market's positive response. Sectors likely to benefit from Trump's victory include traditional energy, defense, real estate investment trusts (REITs), and financial stocks, including those related to blockchain and cryptocurrencies. Trump is expected to reverse regulatory measures and advocate for the oil, gas, and coal sectors. Furthermore, he is likely to implement tax reductions for businesses, which should favor financial stocks, while his stance on cryptocurrencies is also positive. Given Trump's longstanding support for a robust military, defense stocks are expected to perform well. Additionally, the Federal Reserve announced a quarter-point reduction in interest rates on Thursday. "This is a process that requires time," stated Powell during a press conference following the Fed's decision to lower its benchmark overnight interest rate to a range of 4.50%-4.75%. "We continuously assess the net effect of all policy changes on the economy at any given moment. This is a process we engage in with every administration."

November 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 index experienced a decline of 1.4%. The Nasdaq composite, which reached a record high on Thursday morning, fell by 1.5%, thereby ending a seven-week streak of gains. Recent data from Wealthmanagement.com’s monthly Advisor Sentiment Index for September indicates that confidence in the economy has risen by three points to 103, moving slightly into positive territory from last month’s neutral reading of 100. On Friday, the Labor Department reported that the economy added a seasonally adjusted 12,000 jobs in October, a significant decrease compared to the September increase of 223,000. Economists surveyed by The Wall Street Journal had anticipated a gain of 100,000, factoring in the impacts of storms and strikes. Both indexes concluded the month with slight losses. Job growth decelerated considerably last month, influenced by the effects of hurricanes and the ongoing Boeing strike. Nevertheless, the unemployment rate remained stable at 4.1%, aligning with economists’ forecasts. The market's attention is now centered on the possibility of a rate cut or a pause as it approaches next week. Two pivotal reports will influence the Federal Reserve's decisions in November. These options are currently under consideration for central bank policymakers at their upcoming meeting on November 6-7, with this week’s reports on inflation and the labor market potentially affecting the final decision. The Fed is already on track for a 25-basis point rate cut in November and is unlikely to change this course, regardless of the incoming data. As of last Friday, investors were pricing in over a 90% likelihood of a 25-basis point rate cut during the Fed's meeting on November 6-7.

October 31, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. In October, the Dow Jones Industrial Average, S&P 500, and Nasdaq all recorded monthly losses. The Nasdaq was particularly affected, leading a decline in U.S. stock markets on Thursday, as earnings from Meta (META) and Microsoft (MSFT) raised apprehensions about the outlook for major technology firms amid escalating artificial intelligence expenses. On that day, the Nasdaq fell by 2.7%, while the S&P 500 experienced a nearly 1.9% decrease on October 31, 2024.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of October 2024 I Montecito Capital Management

10/1/2024

October 25, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 concluded the week with a decline of 1%, representing its first setback following a six-week period of gains. The stock market is facing challenges as renewed uncertainties regarding the Federal Reserve's interest rate strategy dampen investor enthusiasm for risk. Nevertheless, consumer sentiment has improved for the third month in a row, reaching its highest level since April 2024, as reported by the University of Michigan’s Survey of Consumers. The Consumer Sentiment Index increased to 70.5 in the October 2024 survey, rising from 70.1 in September and surpassing last October’s figure of 63.8. This sentiment is now over 40% higher than the low recorded in June 2022. Tesla emerged as a notable performer following its earnings report, achieving more than a 20% earnings surprise, with gross margins being a frequently highlighted positive aspect. The overall gross margin for the company was 19.8%, an increase from 18.0% in the second quarter and 280 basis points above market expectations.

October 17, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. U.S. stock markets experienced an upward trend, achieving new record highs and concluding their longest weekly winning streak of the year. On Friday, the S&P 500 index increased by 0.4%, surpassing the all-time high established earlier in the week and marking its sixth consecutive week of gains. The Dow Jones Industrial Average led the weekly performance with a 0.9% rise, while the Nasdaq Composite followed with a 0.7% increase. According to Factset, 79% of S&P 500 companies have exceeded earnings per share (EPS) estimates for the third quarter, surpassing the five-year average of 77% and the ten-year average of 75%. In labor market news, applications for jobless claims decreased by 19,000 to 241,000 for the week ending October 12, falling well below the anticipated 262,000. This decline follows a significant spike attributed to Hurricane Helene and an ongoing strike involving Boeing machinists. Minneapolis Federal Reserve President Neel Kashkari expressed agreement with the notion of further gradual reductions in the policy rate in the upcoming quarters to fulfill the dual mandate of low inflation and robust job growth. He noted that the Federal Reserve is nearing its goal of reducing inflation to the 2% target.

October 11, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 advanced by 0.6%, achieving its fifth consecutive week of gains, the longest winning streak since May. The Nasdaq increased by 0.3%, and the Dow Jones ended the week with a 1% rise. Strong bank earnings and further signs of a soft-landing trajectory for the economy contributed to the positive performance of US equity markets. The Consumer Price Index (CPI) recorded a 0.2% rise from the previous month, consistent with the increase noted in August and surpassing economists' forecasts of a 0.1% rise. In September, the CPI rose 2.4% year-over-year, a slight deceleration from the 2.5% annual increase in August. While inflation is showing signs of moderation, it remains above the Federal Reserve's target of 2% on an annual basis. The key inflation measure indicated that price increases did not ease as much as expected in September, although there has been a notable cooling trend over the last two years. The Federal Reserve has recently begun to concentrate on the labor market, which has demonstrated surprising strength in the context of high interest rates.

October 4, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The three primary indices recorded weekly gains, with the Nasdaq leading the way at +1.25%, while the Dow and S&P 500 saw increases of around 0.8% and 0.9%, respectively. A crucial test for the current rally is imminent as corporate earnings reports are set to be released next week, with investors eager to confirm the high valuation multiples through high level earnings growth. The September jobs report has far surpassed expectations, indicating that the U.S. economy added 254,000 jobs, which has led to a decline in the unemployment rate to 4.1%. Wage growth, an essential metric for evaluating inflationary trends, rose to 4% year-over-year, compared to a 3.9% annual increase in August. The strength of the job market considerably reduces the likelihood of a 0.50% interest rate hike this year, and if the economy continues to demonstrate job growth, the prospect of a 0.25% rate cut may also be eliminated. Historically, in the 16 rate-cutting cycles since 1954, equities have significantly outperformed bonds on average, with small-cap stocks yielding slightly higher returns than their large-cap counterparts.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Sept 24

9/1/2024

September 27, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. After two weeks of robust stock market gains, the S&P 500 managed to achieve a modest return of 0.62%, while still concluding its third consecutive week of positive performance. The consumer price index in the United States experienced an increase of 3.4% for the year ending in April, a slight decrease from the 3.5% recorded in March, aligning with market expectations. In April specifically, prices rose by 0.3%, a deceleration compared to the 0.4% increase observed in March. Additionally, core inflation in the United States also showed signs of easing last month. In a separate report, data revealed that the eurozone economy expanded by 0.3% during the first quarter of the year. Furthermore, the Conference Board Consumer Confidence Index® decreased in September to 98.7, down from a revised figure of 105.6 in August. The Present Situation Index, which reflects consumers' evaluations of current business and labor market conditions, fell by 10.3 points to 124.3. Meanwhile, the Expectations Index, which gauges consumers' short-term outlook regarding income, business, and labor market conditions, dropped by 4.6 points to 81.7, although it remained above the critical threshold of 80; a reading below this level typically indicates a potential recession.

September 20, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major U.S. equity indices experienced significant gains over the week, following a Federal Reserve rate cut that exceeded expectations. The S&P 500 increased by 76.53 points, representing a rise of 1.4%. The Dow Jones Industrial Average rose by 669.58 points, or 1.6%. The Nasdaq Composite gained 264.34 points, equivalent to an increase of 1.5%. The Federal Open Market Committee (FOMC) decided to lower interest rates by 50 basis points, bringing the federal funds rate range down to 4.75-5.00%. In a press conference following the announcement, Fed Chair Jerome Powell expressed satisfaction with the decision, stating, "We made a good strong start and I am very pleased that we did," while also indicating a growing confidence that the nation had overcome its struggle with high inflation. Fed officials forecast that the benchmark interest rate will decrease by an additional 50 basis points by the end of this year, a full percentage point in the following year, and another half percentage point in 2026.

September 13, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Over the course of the week, the S&P 500 experienced an increase of 4%, while the Nasdaq Composite saw a rise of 5.9%, marking the most successful week of the year for both indices. The Dow Jones Industrial Average also made progress, advancing by 2.6% during the same period. Economic indicators suggesting a slowdown in inflation appear to bolster the argument for a potential interest rate reduction, with recent developments now introducing the possibility of a more substantial 0.5% cut by the Federal Reserve. The consumer price index for August registered an annualized rate of 2.5%, the lowest since February 2021. Additionally, wholesale prices increased by 0.2% in August, aligning with market expectations.

September 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The S&P 500 and the Nasdaq Composite fell by 1.7% and 2.6%, respectively, as technology stocks suffered significant losses, while the Dow Jones Industrial Average decreased by 1%. The S&P 500 has now recorded four consecutive days of losses, resulting in its largest weekly decline since March 2023, a pattern that was similarly observed in the Dow. Since 1950, the S&P 500 Index and the Dow Jones Industrial Average have experienced their most significant percentage declines during the month of September. Over the past decade, bonds have decreased in value in eight out of ten Septembers, and gold has seen a decline every September since 2017. The S&P 500 has recorded losses in each of the last four Septembers, and this year, the non-farm payrolls data may have increased importance for U.S. equities. This week, investors observed a phenomenon that has not occurred since the summer of 2022: a positively sloped yield curve. In particular, the yield on the 10-year U.S. Treasury note surpassed that of the 2-year notes by a small margin. US manufacturing activity contracts for a fifth straight month. The ISM manufacturing purchasing managers' index (PMI) came in at 47.2% in August – up 0.4 percentage points from 46.8% in July.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month Aug 24

8/1/2024

August 30, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. The stock market ended the week and the month positively, buoyed by economic data that suggests a "just-right" Goldilocks economy, characterized by stable growth and moderated inflation. The Dow Jones Industrial Average rose by 0.6%, marking a record high for the fourth time this week. In addition, the S&P 500 and Nasdaq Composite saw increases of 1% and 1.1%, respectively. The Gross Domestic Product (GDP), an indicator of economic growth, advanced at an annualized rate of 3% during the second quarter, an improvement from the prior estimate of 2.8%. The strength of the U.S. economy is largely attributed to robust consumer spending and business investment. Furthermore, consumer spending in the U.S. demonstrated solid growth in July, suggesting that the economy remains strong despite a moderate rise in prices.

August 23, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. U.S. stocks rallied closer to their records after Fed Chair Jerome Powell said the “time has come” to lower its main interest rate from a two-decade high. For the week, both the S&P 500 and Nasdaq rose 1.4%, while the Dow Jones closely followed with a 1.3% gain. Powell further stated, “The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data.”

August 16, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Markets rallied with a strong recovery on news of cooling inflationary trends. The Nasdaq soared 5.3% on the week, as tech stocks jumped after a sharp selloff in recent weeks. The S&P 500 gained 3.9% and the Dow added 2.9% over the week. The data for July indicates a waning of wholesale inflation in the United States, suggesting that price pressures are subsiding. When food and energy prices, which are subject to monthly fluctuations, are excluded, core wholesale prices remained unchanged from June and rose by 2.4% compared to July 2023. These increases were more subdued than what economists had predicted and were nearly in line with the Federal Reserve's inflation target of 2%. Furthermore, consumer prices increased by 0.2% in July, bringing the annual rate to 2.9%, after two consecutive months of stable or declining prices, and falling below 3% for the first time since March 2021. The median change in Core CPI for July was an increase of 0.3%, with a 12-month increase of 4%. Over the last 13 presidential elections, the S&P 500 Index has typically shown positive performance in the 90 days before and after Election Day.

August 9, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. Before markets opened on the first full trading week of August, investors were already raddled by a poor job report and recession worries, then before Monday's market open, global equities were further impacted by Japan's Nikkei 225 experiencing its largest daily loss due to an unexpected interest rate hike from the Bank of Japan. It was a wild, chaotic trading week where the S&P 500 sank more than 3% and lost $1.3 trillion in value, notching its worst day since the 2022 bear market. After recovering another 0.5% on Friday, the S&P 500 closed the first week of August near flat, just down 0.05%. The Dow jones was off 0.6% while the finished -0.2% on the week.

August 2, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA, Montecito Capital Management. All major US stock indices sharply sold off for the week on recession fears and concerns over chip-tech stocks. Both the S&P 500 and the Dow fell 2%, while the Nasdaq dropped by 3%. Disappointing US jobs report spurred recession fears which, in turn, rattled stocks and redirected concerns that the Federal Reserve missed the window to stimulate the economy with an earlier rate cut. In particular, chips stocks took it in the nose after Intel (INTC) plummeted -26% on Friday, after the company cut earnings expectations, its dividend and work force.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month July 2024

7/2/2024

July 26, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. The S&P 500 and Nasdaq indexes both experienced consecutive weekly losses for the first time since April, with the US broad market equity index dropping by 0.8% and the tech-Nasdaq falling by 2.1%. The U.S. economy saw a growth of 2.8% in the second quarter, surpassing expectations. Despite the prevailing belief that the economy was slowing down, the Q2 growth marked a significant increase from 1.4% in Q1 and exceeded market expectations by nearly a percentage point. Consumer spending has consistently grown by around 2.3% on a year-over-year basis for six consecutive quarters.

July 19, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Amid tech-stock rout, the S&P 500 and Nasdaq posted the sharpest weekly losses since April. The S&P 500 shed 2% for the week, while the Nasdaq dropped 3.6%. The indexes have tumbled amid a selloff in chipmakers and other large-cap technology stocks. Microsoft (MSFT) disrupted many operating systems around the world after a coding error by cybersecurity provider CrowdStrike (CRWD) crashed, thereby paralyzing airlines, trading systems, courts, and other critical services.

July 12, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All three major US equity indexes finished with gains for the week, led by Dow Jones with slightly more than 2%, followed by the S&P 500 nearly reaching a 1.5% gain, and the Nasdaq setting a new high with almost a 1% weekly gain. June also marked the second consecutive month of soft inflation readings, with the June Consumer Price Index (CPI) report showed core CPI eking up only 0.06% over the month. There are a number of positive factor inputs that are driving the positive returns for stocks in 2024:

The GDPNow model estimate for real GDP growth (seasonally adj annual rate) in the 2Q 24 is 2.0% on July 10, up from 1.5% on July 3
GDP growth in the United States is projected to be 2.6% in 2024
SPX is expected to report Y/Y earnings growth of 8.8% for Q2 2024
CY 2024, analysts are calling for (year-over-year) earnings growth of 11.0%
Interest rate curve forward contracts show 90% chance Sept rate cut & second rate cut to November, with about even odds of a third rate cut by year's end
S&P Dow Jones Indices expects S&P 500 companies to repurchase $885 billion in stock in 2024

July 5, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks rallied on the week led by tech-laden Nasdaq +3.5%, followed by the Dow Jone +0.7% and the S&P 500 +0.5%. Nevertheless, the S&P faces increased concentration risk as the broad market index nears 17% year-to-date, with just five stocks responsible for 63% of the S&P's return in the current year. The latest employment report for June revealed a surge in unemployment up to 4.1%, nearing a level not seen in three years, which has intensified the pressure for the Federal Reserve to consider implementing interest rate reductions come September. The market's confidence in the timing of a Fed cut strengthened Friday, as the futures contract-implied odds of a September cut rose to 75%, up from 64% a week ago, and the chances of two or more rate cuts by the end of 2024 climbed to 71%, up from 63% a week ago, according to CME FedWatch Tool.

Kip Lytel CFA Weekly S&P 500 Stock Market Summary, Month June 2024

6/1/2024

June 28, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks closed the week with mixed results, but an overall strong showing for the month of June 2024. For the week, the Nasdaq led with +0.8% followed by the S&P 500 adding 0.2%, while the Dow declined 0.5%. Last month’s inflation figure came in sluggish, slowing to its lowest annual rate in more than three years while CPI was essentially flat last month, or just 2.6% from the prior year. As depicted in the below chart, for the month of June, all equity indices finished resoundingly in the green, while the very impressive year-to-date returns were led with greater sector breadth of Information Technology, Utilities, Industrials and Health Care.

June 21, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks finished up for the third week, led by the Dow Jones +1.5%, followed by the S&P 500 +0.6% and the Nasdaq 0.01%. While the tech-infused Nasdaq has been on a tear these past months, the chip-stock rally lost wind as Nvidia (NVDA) pulled back on the week. Before Friday’s Nvidia drop, its market cap stood at $3.1 trillion and was up 170% for the year and was more valuable than the many large European markets like Britain and France. As the upcoming Presidential election starts to make more headlines, a relevant historical benchmark for stocks is the S&P 500 average 6-month return leading up to a Presidential election in early November is 4.67%, which compares to 2.14% in non-election years. [according to Schaeffer’s research]

June 14, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US stock market indices finished mixed with the Dow down 0.5%, the S&P 500 up 1.6% and the Nasdaq sharply up 3.2%. The Consumer Price Index (CPI) came in flat over the previous month, and below consensus economic targets. CPI rose 3.3% over the prior year in May, marking a deceleration from April's 0.3% month-over-month increase. However, Fed Chair Powell highlighted upside risks to inflation remain. In particular, he mentioned shelter prices, which showed no indications of slowing for the past 11 months. Stocks overall, however, remain on a positive return trend for both the month of June and year-to-date 2024.

June 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US market equities posted another winning week led by the Nasdaq +2,4%, followed by the S&P 500 +1.3% and the Dow Jones 0.3%. The European Central Bank cut rates for the first time since 2019, adding pressure to the Fed to potentially lighten its stance on the rate policy. Recent data from the U.S. Labor Department has also raised concerns about a potential cooling in the labor market.

June 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks rallied for the month of May with the S&P 500 closing with the best performance month since February, up +4.8%. The Nasdaq and Dow also posted gains, up 6.9% and 2.3%, respectively. However, US equities posted losses on the for the last week of May: The S&P 500 finished down 0.5%, Dow was off 1% and the Nasdaq dropped 1.1%. Futures tied to the Fed policy rate increased bets of roughly even odds that the central bank will start to cut rates in September and upped the chances of a second rate cut in December to about the same probability.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 May 2024

5/1/2024

May 24, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. The S&P 500 narrowly missed breaking its previous record set on Tuesday, but still managed to achieve a fifth consecutive week of gains, eking out 0.03%. The Dow Jones Industrial Average experienced a sharp loss of 2.3%, whereas the Nasdaq composite soared by 1.4% to surpass its previous all-time high established earlier in the week. The inflationary overhang continues to weigh on stocks, which is problematic for the Fed reserve. US business activity accelerated to the highest level in just over two years in May, with the US Composite PMI Output Index coming in hot at 54.4. Any PMI reading above 50 indicates expansion in the private sector.

May 17, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US equity markets marked another strong weekly performance led by tech-based Nasdaq +2.1% followed by the S&P 500 +1.5% and the Dow Jones +1.2%. Investor sentiment expressed renewed optimism that the economy is heading for a soft landing and may therefore still have Fed rate cut support, while projections for strong earnings continue to fuel stock gain. Consumer price index data for April showed moderating core inflation while retail sales also cooled more than expected. The core CPI, which strips out volatile food and energy prices, rose 0.3% compared to March levels, in line with estimates. Moreover, annual core CPI inflation rate eased to 3.6% from 3.8% in March.

May 10, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA.The broad US market equity index marked its third consecutive weekly positive performance with the S&P 500 finishing with +1.67% return. The S&P 500 now sits only about 1% away from its all-time closing high of 5,254.35 set on March 28, 2024. Stocks were buoyed by job numbers with new claims for unemployment benefits increasing more than expected to a seasonally adjusted 231,000 last week, which sparked hopes for Fed rate cuts ahead. The S&P 500's operating profit margin for the first quarter of 2024 was 11.8%, which is higher than the profit margin for the trailing four quarters of 11.4%, and superior to both the calendar years of 2023 and 2022.

May 3, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, both the Dow and the Nasdaq gained 1.1% while the S&P 500 finished up 0.6%. Recent economic data show that inflation remains stubbornly above the Fed's 2% target, putting 2024 rate cuts at risk, or at least more muted. Consumer confidence fell sharply in April as inflation worries and a lackluster outlook on the job market squashed optimism to its lowest level since 2022. The Conference Board's consumer confidence index retreated to 97 in April, below economists' expectations of 104, and below March's reading of 103.1.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 April 2024

4/1/2024

April 26, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US equities snapped its losing streak with the Nasdaq soaring 4.2%, followed by the S&P 500 +2.7% and the Dow Jones finishing up 0.7%. The markets were fueled by powerful earnings from Google and Microsoft and encouraging inflation data. The U.S. GDP grew at a 1.6% annualized rate in Q1, below expectations, while the core Personal Consumption Expenditures (PCE) Price Index came in at 3.7% annualized. Consequently, the reemergence of the “stagflation” topic reverberated through the markets. The stock market is also supported by the Federal Reserve leaving three rate cuts on the table for the remainder of 2024, hinting they viewed strong inflation data earlier this year as a temporary rather than a sticky, lingering problem.

April 19, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, the S&P 500 fell 3.05%, the Nasdaq plummeted 5.52%, and the Dow edged +0.01%. The tech sector has placed significant downward pressure on the stocks and the sector was the worst performing in the S&P 500 for the week. In particular, the Netflix stock drop was one of the bigger drags on the benchmark S&P index. The stock market has also been consolidating downward on lower expectation on the number of Fed rate cuts and the new uncertainties on timing of Fed rate actions. Inflation has been stickier than anticipated and there is a prevailing view that there still might be an abundance of quantitative easing cash in the economy. The S&P and Nasdaq have declined for six consecutive sessions, the longest streak of declines for each since October 2022.

April 12, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All three major US equity indexes dropped by over 1% for the week on abating consumer confidence and stronger than expected inflation. The University of Michigan's consumer-confidence reading edged down, while US consumer prices came in hotter than expected in March, according to the latest data from the Bureau of Labor Statistics Dow Jone fell 1.2%, while the Nasdaq composite dropped 1.6%. All 11 of the S&P 500's sectors recorded weekly losses, with the S&P 500 finishing down 1.5% on the week; that hasn't happened since September. The Consumer Price Index (CPI) rose 0.4% over the previous month and 3.5% over the prior year in March, an acceleration from February's 3.2% annual gain in prices.

April 6, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. US equities pulled back from record highs on economic data and comments from the Fed, which further clouded the outlook for rate cuts. The S&P 500 declined -0.9%, the Nasdaq Composite pulled back -0.8%, and the Dow Jones Industrial Average fell -1.3%.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 March 2024

3/1/2024

March 29, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. For the week, US stock indices finished mixed with both the S&P 500 and Dow Jones advancing 0.39% and 0.84%, respectively, with the Nasdaq slipped 0.3%. For the month of March, all stocks indices rallied: the Dow +2.08%, the S&P +3.1% and the Nasdaq added 1.79%. For the quarter, the Dow gained 5.62%, the S&P 500 jumped 10.16% and the Nasdaq shot up 9.11%. During the week, Fed Chair Jerome Powell commented on an important new inflation report: "along the lines of what we want to see" but also indicated that inflation is still on a "bumpy path" to the central bank's goal of 2%. The year-over-year change in the so-called "core" Personal Consumption Expenditures index — which excludes volatile food and energy prices — came in at 2.8% for the month of February. That was in line with the economists’ expectations and down from 2.9% in January.

March 22, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Wall Street optimism on stocks is at its highest level since early 2022, moving all US major indexes over +2% on the week. The S&P 500 gained 2.3% while the Dow climbed 2% marking its biggest weekly percentage advance since mid-December; the Nasdaq rose 2.9%, its biggest weekly percentage rise since mid-January. The Federal Reserve expects three quarter-point rate cuts this year, despite the recent uptick in inflation and the surging stock market. Fed policymakers did trim their expectation for rate cuts in 2025. Still, the Fed's key rate would fall to a range of 3.75% to 4% by the end of 2025. The economy remains elevated by an overall unemployment rate (U-3) at 3.7% with average hourly earnings rising to a nearly 2-year high in January 2024. Indeed, strong data points countered prominent economist forecasts of a looming recession.

March 15, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Stocks finished lower, notching a second consecutive losing week for Wall Street. The Nasdaq dropped 0.7% while the S&P 500 slipped 0.13% and Dow inched lower by 0.02% on the week. Investor enthusiasm ebbed, weighing down on the stock market with hot inflation worries. This week's Consumer Price Index (CPI) report portrayed some price pressures with February's core CPI popping 0.4%, marking a second monthly PPI jump. For those who called January’s hot CPI "a fluke,” the six-month annualized rate of change has been accelerating since last fall. The Labor Department said Thursday that its producer price index (PPI) rose 0.6% from January to February, up from a 0.3% rise the previous month. Measured year over year, producer prices rose by 1.6% in February, the most since last September. These inflationary figures are expected to present a challenge for the Fed’s policy toward easing when it meets next week.

March 8, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. All major US equity market indexes finished down on the week: The Nasdaq Composite tumbled 1.2% to finish the week, the S&P 500 lost 0.3% and the Dow Jones Industrial Average ended the week 0.9% lower. Of the 500 companies in the S&P 500, 74 companies have issued negative EPS guidance for Q1 2024, which is above the 5-year average of 58 and above the 10-year average of 62.

As shown below, 2024 has been marked by the S&P 500 reaching an all-time high (top chart), yet the percentage of stocks trading above their 200-day moving averages has been flat (bottom chart).

March 1, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. Several strong earnings reports of the likes of Salesforce (CRM), NetApp (NTAP), and chip stocks (DELL) propelled US equities higher. For the week, the S&P 500 gained 0.95% and the Nasdaq jumped 1.74%. Analysts increased EPS estimates for S&P 500 companies for 2024 in 5 of 11 sectors during the months of January and February, according to FactSet.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 February 2024

2/1/2024

February 16, 2024, Weekly Stock Market Return Recap, by Kip Lytel CFA. After five straight weeks of positive stock moves, the equities took a breather on renewed inflation concerns. The S&P 500 declined 0.4% and the Nasdaq dropped 1.3% on the week, while the Dow finished 0.1% down on the week. A hot Producer Price Index (PPI) number sent jitters among some market watchers, with an unexpected 0.3% January increase. Core PPI, which excludes food, energy, and trade services, jumped 0.6%, its largest increase in a year.

February 3, 2024, Weekly Stock Market Return Recap. Bolstered by robust earnings from tech leaders like Meta and Amazon, the S&P 500 finished the week at a new high, up 1.1% for the week. It is no surprise the tech-ladened Nasdaq outpaced the broad market index, surging 1.7% to another new high as well. Fourth Quarter GDP growth came in surprisingly strong at 3.3%, handily beating economists’ expectations of a 2.0% increase and overshooting the Fed’s own model which predicted a 2.4% growth rate. Consumer spending remained the driving force behind the economic growth. On the week, Fed Chair Powell said the Central Bank isn’t "actively considering moving the federal funds rate down." Powell also voiced rate cut hesitancy by indicating policymakers are waiting to gain "greater confidence" that inflation will remain soft to set up a cut conversation: “We want to see more good data [on inflation]. It is not that the six months of data isn't low enough. It is. But whether we can take that with confidence that we are moving sustainably on to 2% is a question.”

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 January 2024

1/6/2024

January 26, 2024, Weekly Stock Market Return Recap. All US equity indexes finished the week in the green, lead by the S&P 500 +1.1%, followed by the Nasdaq +0.9% and the Dow Jones +0.7%. On the economic front, core inflation, which excludes volatile food and energy prices, slowed to 2.9%, a sharper decline than economists were expecting and the most muted rate since March 2021. The market has been uplifted on the year with data showing the ideal scenario for stocks, one where you have both a resilient economy and moderating inflation all which elevate hopes that the Federal Reserve rate cuts will come sooner than later.

January 19, 2024, Weekly Stock Market Return Recap. The broad market stock index closed the week at a new high, with the S&P 500 gaining 1.1%, while the Nasdaq outperformed with a 2.26% weekly return. Stocks continue to be bolstered by rate cuts and positive earnings expectations. All three major equity indices are now up on the year, as this week moved the Dow Jones and Nasdaq out of the red on a year-to-date basis.

January 12, 2024, Weekly Stock Market Return Recap. For the week. The S&P 500 recovered in the week, finishing 1.84% up from last Friday. The broad market stock index currently stands up 0.86% for the year, and now sits just 0.27% below its record close from January 3, 2022. Consumer prices increased more than expected in December as investors continue to look for signs the Federal Reserve can begin to cut interest rates. The December Consumer Price Index (CPI) showed prices ticked up slightly at 0.3% over last month, an increase from the 0.2% seen in November. Prices rose 3.4% over the prior year, an increase from the 3.1% increase seen the month prior. Economists expected prices to increase 0.2% month over month and rise 3.2% year over year.

January 5, 2024, Weekly Stock Market Return Recap. For the week, the S&P 500 notched its first losing week since October on technology stock weakness and an unpleasant hot jobs report. The Dow Jones Industrial Average slipped 0.7%, the S&P 500 declined 1.5% and the tech-heavy Nasdaq fell 3.2%; bonds declined sharply. December job numbers blew out expectations for December at 216,000 jobs gained, Economists were projecting the U.S. to add roughly 170,000 jobs last month, according to consensus estimates. The Fed released minutes from the U.S. central bank's Dec. 12-13 meeting released Wednesday, indicating that officials are largely optimistic about the path of inflation, and expect to begin reducing rates sometime this year. Fed Chair Powell told reporters at the post-meeting press conference, "We added the word ‘any’ as an acknowledgment that we are likely at, or near, the peak rate for this cycle but participants also didn't want to take the possibility of further hikes off the table.

2023 Stock Market Recap I S&P 500 2023 Returns & Insights

1/1/2024

The year of 2023 was a year for growth stocks, but many other equity sectors participated by ending on a positive note. Notably, the technology communication growth sector’s sharp outperformance is unusual because normally when you have a bear market, the leadership for the next bull market is different. Insofar as the S&P 500 finished the year up 26%, it was largely propelled by two sector leaders: Information Technology, up an astounding 58%, and Communication Services close behind, up 56%. Conversely, Utilities and Energy posted -7% and -1% losses on the year, while Consumer Staples and Healthcare were laggards at 0.5% and 2%, respectively.

Looking back to 2023, as we entered last year the 25 Wall Street strategists surveyed were all off the mark, with only three predicting S&P returns of more than 14% and more than half of them forecasting returns of less than 8%. However, we also forecasted modest single digit positive returns for 2023. We nonetheless adapted to the Fed’s dovish rate signals expressed later in the year by adding risk to portfolios, particularly in the fourth quarter (Q4). Consequently, client portfolios not only overcame 2022 market losses, but finished the year firmly in the green.

Another significant market return consideration, and rather unaddressed by Wall Street, is the Aggregate Bond Market Index (AGG) has not recovered its -13.0% loss from 2022, as the intermediate bond index finished with a modest +5.65% for the year. This fact has a material impact on the popular traditional 60/40 balanced portfolio. Indeed, the traditional 60/40 portfolio has a 40% bond allocation, which current stands -9% underwater due to double digit loss in bonds back in 2022.

Financial pundits have made much ado about the “Magnificent Seven” stocks and their impact on S&P 500 returns during 2023. This financial conundrum is worthy of analytic revisit given the lopsided risk these stocks could pose in 2024. First, the combined weight of these companies is greater than any combined weight of the top seven companies in the history of the S&P 500. Second, these seven stocks now account for more than one-quarter of the S&P 500 index weighting. This overdependence on such a narrow stock group can be risky, leaving markets vulnerable to a downturn should the fortunes of the Magnificent Seven falter.

Weekly Stock Market Summary, Kip Lytel CFA I S&P 500 December 2023

12/2/2023

December 22, 2023, Weekly Stock Market Return Recap. For the week, the S&P 500 rose 0.75% and the Nasdaq gained 1.2%, while the Dow Jones mildly inched up 0.2%. The US equity market continues to be supported by cooling inflation data, including the most recent Personal Consumption Expenditure Index which came in at only +0.2% in October, sharply down from 0.7% reported in the previous month. Investor sentiment is encouraged by ongoing indicators suggesting the Fed can prospectively initiate an easing of Fed rates in 2024 given inflationary pressures continue to show signs of weakening.

December 15, 2023, Weekly Stock Market Return Recap. The Dow Jones led the US equity indices with a +2.9% gain on the week, followed by the Nasdaq up +2.8% and the S&P 500 higher by +2.5%. The Federal Reserve kept interest rates unchanged at a meeting of its policy-setting committee, keeping the target range for the federal-funds rate at 5.25-5.50%. Fed Chair Powell commented, "It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease." The median forecast in Federal Open Market Committee members’ latest Summary of Economic Projections places the rate ending 2024 at 4.6%. However, investors expect significantly more cuts in 2024, while the financial markets are pricing in around 1.25 percentage points of rate cuts next year, starting in March.

December 7, 2023, Weekly Stock Market Return Recap. The Dow Jones Industrial Average jumped 2.4% on the week, followed by the S&P 500 +0.8% and Nasdaq +0.4%. US consumer sentiment rebounded sharply in early December, with the University of Michigan consumer sentiment index surging to 69.4 in December from 61.3 in November, topping all forecasts. Further, the data also showed a shift in consumer households’ year-ahead inflation expectations, dropping by the most in 22 years.

December 2, 2023, Weekly Stock Market Return Recap. Goldilocks economic data, stable earnings, oil price weakness, and cash flowing back into stocks has resurged the US equity rally to where year-to-date gains are nearly their highest levels for the year. On a total return basis, the month of November was a blockbuster month with the Nasdaq finishing up 10.8%, the Dow Jones +9.2% and the S&P 500 ended the month +9.1%. After the tepid inflation (CPI/PPI) reports, and Q3 US GDP was revised to 5.2% from 4.9% (5.0% expected), the market momentum changed, and now investor sentiment is towards Fed being done raising rates.

Weekly Stock Market Recap I S&P 500 November 2023 Summary

11/4/2023

November 24, 2023, Weekly Stock Market Return Recap. For the short holiday week, the S&P 500 and Nasdaq both rose about 1%, with the surprise leader being the Dow Jones, finishing up 1.3%. The percentage of bullish investors increased to 45.3%, coming in above the historical long-term average of 37.5%, which coincides with the $40 billion money flowing back into stocks. This dollar flow into equities marks the biggest two-week inflow since February 2022. The week was also assuaged by geopolitical events of Israel and Hamas starting a four-day ceasefire on Friday, which included an incremental daily return of hostages held by Hamas.

November 17, 2023, Weekly US Equity Market Return Recap. Stocks continued their rise upward on the week with the S&P 500 up 2.2% and the Nasdaq finishing +2.4%; the Dow also closed positive, at +1.9%. First, November has historically been a upward month for the US stock market, with the S&P 500 gaining on average +1.7% in November going back to 1950, ranking the top month for positive returns in the year. Second, the economy showed further signs of slowing with the core CPI declining to only +0.2% month-over-month. Further, stock earnings remain stable, with the third quarter’s year-over-year blended earnings growth coming in around 6.6%. However, excluding the energy sector, the growth rate for the index is 12.0%. The stock market sentiment has a bias now for the Fed to pause, and perhaps start cutting rates at some point in 2024. This conviction is reinvigorating money flows into stocks. Yet, Fed Chair Powell comments on Thursday, “We are not confident” that the benchmark rate is sufficiently high to reduce inflation to 2%, the Fed’s target, runs counter to the pause and cut-rate theory. Indeed, Powell also commented “We know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes along the way.”

November 3, 2023, Weekly Stock Market Return Recap. For the week, the S&P 500 jumped 5.9%, for its biggest gain since November 2022 while the Nasdaq overshot the broad market index, closing the week with a whopping +6.6% gain. The Dow Jones moved up 5.1% on the week, marking its biggest gain since late October 2022. Market sentiment turned bullish on expectations that the Fed could be done with rate hikes. The Federal Reserve held interest rates in the range of 5.25%-5.50%, the highest level since 2001. While the market is clearly taking a victory lap, the Fed left the door open for further rate increases. For example, the Fed elevated its assessment of the economy to "strong" in the third quarter from "solid" in September, then added: "Recent indicators suggest that economic activity expanded at a strong pace in the third quarter." Nonetheless, the market celebrated nonfarm payrolls that came in 20,000 lower than consensus forecast at 150,000 for the month; that was a sharp decline from the gain of 297,000 in September. Further, the unemployment rate rose to 3.9%, the highest level since January 2022, amid a drop in household employment.

Weekly Stock Market Recap I S&P 500 Monthly Summary Oct 2023

10/2/2023

October 27, 2023, Weekly Stock Market Return Recap. All three major stock indexes registered steep weekly losses, led by the Nasdaq -2.6% followed by S&P 500 and the Dow Jones, -2.5% and -2.1%, respectively. Two of the largest market capitalization stocks in the Nasdaq, Facebook’s Meta Platforms and Google-parent company Alphabet, disappointed the markets with earnings and were sharply down for week. Overall, stocks have hit a technical correction with the S&P 500 down over 10% from its yearly high. With about half of the S&P 500 stocks having now reported, shares of companies that disappointed analysts’ estimates on the earnings-per-share metric have seen their stock underperform the benchmark index by a median of 3.7%. That’s the worst performance in the data’s history going back to the second quarter of 2019. Even publicly traded US stocks beating estimates have lagged the S&P 500 by 0.6%, which is the first such underperformance since the fourth quarter of 2020. The US economy grew at its fastest pace in nearly two years at 4.9% during the most recent quarter ending in September. Economists surveyed by Bloomberg estimated the US economy grew at an annualized pace of 4.5% during the period. Indeed, GDP continues to defy predictions for a slowdown as many expected the Federal Reserve's monetary tightening to constrain the American consumer.

October 20, 2023, Weekly Stock Market Return Recap. US stocks fell to four-month lows on the week, led by the Nasdaq -1.5%, followed by the S&P 500 -1.3% and Dow Jones -0.9%. The losses were spurred by fears that the Israel-Hamas conflict could further escalate in the Middle East, Fed rate hike talk and strong monthly retail sales. Fed Chair Powell spoke on Thursday, remarking “Doing too little could allow above-target inflation to become entrenched and ultimately require monetary policy to wring more persistent inflation from the economy at a high cost to employment.” Powell further commented that “additional evidence of persistently above-trend growth, or that tightness in the labor market is no longer easing, could put further progress on inflation at risk and could warrant further tightening of monetary policy.” Retail sales rose 0.7% in September from the previous month, more than double Wall Street expectations of 0.3% growth, spurring further rate hike concerns.

October 13, 2023, Weekly Stock Market Return Recap. U.S. equity market ended the week higher on lower interest rate expectations, better-than-expected corporate earnings, and rising oil prices. The S&P 500 finished the week up 0.45% after giving back -0.5% on Friday, marking its second week of positive results, while the Dow Jones return +0.79%. Energy, utilities, and real estate sectors outperformed in the week, while consumer staples, health care, and materials were the laggards. Food and energy increased more than anticipated in the month of September by 0.5%, marking the third straight month of inflationary increases.

October 6, 2023, Weekly Stock Market Return Recap. The broad US market equity index of the S&P 500 rose for the week, snapping a four-week losing streak. For the week, the S&P 500 finished up 0.5%, the Dow fell 0.3% and the Nasdaq rose 1.6%. Every consumer confidence measurement is below pre-pandemic levels, with consumer confidence falling again in September 2023 to a four-month low, marking two consecutive months of decline. Further, the overall Economic Optimism gauge plummeted 16% to 36.3, marking the weakest since August 2011 and its 26th straight month in negative territory. However, the job front remains healthy, with the US economy adding 336,000 jobs in September, almost double the number expected. Employment continues to spike investors worry that overall resiliency on the jobs front will give the Fed conviction for a more restrictive policy going forward. Further, the number of open jobs by the JOLTS report showed an increase for August, raising questions of whether the job market is tempering fast enough to appease the Federal Reserve. Case in point, Cleveland Fed President Loretta Mester said Tuesday she is likely to favor a rate hike at the next meeting if the current economic situation holds.

Weekly Stock Market Recap I S&P 500 Monthly Summary Sep 2023

9/4/2023

September 29, 2023, Weekly Stock Market Return Recap. The UAW strike talks with leading auto companies, inflation data and the government debt ceiling concerns continued to be an overhang on stocks for the week, and the month overall. For the week the S&P 500 finished down 0.7% and the Dow off by 1.3%., while the Nasdaq ended about flat for the week. The S&P 500 ended the month down 4.9% and the quarter lower by 3.7%. The Nasdaq Composite was off 5.8% in September, and down 4.1% for the quarter. Both posted their worst months this year. A key inflation metric, the personal consumption expenditures (PCE) price index, excluding the volatile food and energy components, increased 3.9% on an annual basis for August, far above the Fed’s 2% inflation target. U.S. consumer spending was revised downward to an annualized rate of 0.8%, down from the initial 1.7% reported for the second quarter of 2023. This new figure marks the weakest spending growth in more than a year. The Fed found that the bottom 80% of income earners were making lower bank deposits and had reduced liquid assets.

September 22, 2023, Weekly Stock Market Return Recap. Stocks dropped for the third straight week and the broad market equity index marked its sharpest weekly loss since March: The S&P 500 and the Nasdaq dropped 2.9% and 3.6%, respectively, while Dow Jones ultimately ended the week 1.9% lower. Moreover, the S&P 500 dipped below its 100-day moving average - a key support level. Though the Fed took no rate action during this month’s FOMC meeting, the door was left wide open for future hikes. Twelve participants at the meeting penciled in the additional hike, while seven opposed it. That put one more in opposition than at the June meeting. Markets had fully priced in no move at this meeting, which kept the fed funds rate in a targeted range between 5.25%-5.5%, the highest in some 22 years. Fed Chair Powell also said an additional hike at one of the two remaining Fed meetings for 2023 was “more than likely” and "It's a real rate that will matter and that needs to be sufficiently restrictive." Projections released in the Fed's dot plot showed the probability of one more increase this year, then two cuts in 2024; there were two fewer cuts than what was indicated during the last update in June. In other news, the three months leading to June, S&P 500 companies spent just $175 billion on share buybacks, a sharp 20% drop compared with the year before, according to the Financial Times.

September 15, 2023, Weekly Stock Market Return Recap. Wall Street marked another losing week for stocks: The S&P 500 dropped 1.2%, the Dow Jones declined 0.8% and the Nasdaq composite fell 1.6%. Consumer Price Index (CPI) rose 0.6% over last month and 3.7% over the prior year in August, an acceleration from July's 0.2% monthly increase and 3.2% annual gain in prices. Economists surveyed by Dow Jones were looking for respective increases of 0.6% and 3.6%. Other capital market distractions include union workers’ strike against all Big Three Auto companies. for first time in history, and China flailing economy showing some growth improvement, except for the lingering threat of a looming real estate collapse.

September 8, 2023, Weekly Stock Market Return Recap. US equity markets declined on investor concerns over China’s iPhone curbs, spiking energy costs and unemployment claims hitting their lowest levels since February. Indeed, the latter two factors reignited fears that these inflationary and economic signs could push the Fed to continue its rate hike path. For the week, the S&P 500 dropped -1.3%, the Dow Jones declined -0.8% and the Nasdaq fell -1.9%.

September 1, 2023, Weekly Stock Market Return Recap. Wall Street closes out first losing month since February with the S&P 500 -1.8% and the Dow Jones -0.5%. The number of open jobs in the US dropped to its lowest level in more than two years last month as signs of a slowdown in the labor market grew in July. However, the Federal Reserve's preferred inflation measure of Personal Consumption Expenditures (PCE) edged higher in July, reversing some of the prior month's sharp drop. The PCE Index rose 4.2% over the prior year in July, up from 4.1% in June. Federal Reserve Chair Jerome Powell and European Central Bank ("ECB") President Christine Lagarde reiterated they have no plans to change their 2% inflation goal at last week's Jackson Hole Economic Symposium.

Weekly Stock Market Recap I S&P 500 Monthly Summary August 2023

8/5/2023

August 25, 2023, Weekly Stock Market Return Recap. After three weeks of equity market losses, the US stock market indexes finished in the green for the week: The S&P 500 finished +0.8%, the Dow Jones gained 0.73% and the Nasdaq close the week up 0.94%. The market took refuge in that Powell’s Jackson Hole speech was not overly hawkish while he also noting economic strength: “The economy may not be cooling as expected. So far this year, GDP (gross domestic product) growth has come in above expectations and above its longer-run trend... The message is the same: It is the Fed’s job to bring inflation down to our 2 percent goal, and we will do so.” Powell also added, “we are prepared to move rates further, if appropriate.” However, Federal Reserve Bank of Philadelphia President Patrick Harker said he sees interest rates on hold for the rest of this year, and that policymakers have likely undertaken sufficient tightening. The U.S. Dollar Index hit a 10-week high as investors sought a safe haven due to concerns about China's economy, which is experiencing a further decline in health for its economy. China's central bank unexpectedly cut a range of key interest rates in a bid to spur growth in its faltering economy, and notably, China also suspended publication of its youth jobless data.

August 18, 2023, Weekly Stock Market Return Recap. For the week, the S&P 500 and Dow Jones both lost about 2% while the Nasdaq dropped 2.6%. Both the S&P 500 and Nasdaq have broken down below their 50-day moving averages for the first time in months. The Nasdaq has plummeted 7.2% in the past three weeks, its sharpest three-week drop since late December. Similarly, the S&P 500's three-week loss of 4.6%, marking its deepest decline since the three weeks ending on March 10. The August market pullback has been driven by equity investors concern over the bond market, the Fed’s interest rate path and China. Indeed, the weak economic data for China has a worldwide demand ripple effect and Fed Minutes suggests another rate hike is still on the table. Specifically, the Fed Minutes included the following phrases: "Most participants" continued to see "significant upside risks to inflation, which could require further tightening." Investors are acutely sensitive to strong economic data which is perceived to be tied to Fed rate hikes and the latest data out of the U.S. Commerce Department shows retail sales rose 0.7% in July after upward revisions in the previous two months. However, retailer CEOs have indicated the economy may finally lose some momentum later this year as student loan debt repayment returns in October.

August 11, 2023, Weekly Stock Market Return Recap. The S&P 500 and Nasdaq both gave up ground for the second week, falling 0.3% and 1.9%, respectively. The Producer Price Index (PPI) rose at a higher-than-expected pace of 0.3% last month after increasing 0.1% in June. Economists had expected wholesale inflation to rise, but only to 0.2%. The Consumer Price Index (CPI) also rose 3.2% in July over the prior year, a slight acceleration from June's 3% annual increase. Over 84% of the S&P 500’s market stock constituents have reported earnings with 72% beating estimates by 7.2%.

August 4, 2023, Weekly Stock Market Return Recap. The S&P 500 dropped 2.3% on the week, marking its biggest one-week decline since the week ended March 10. The tech-heavy Nasdaq stumbled around 2.8%, also its worst week in months. Market sentiment was rattled by the recent Fitch downgrade of U.S. debt from AAA to AA+. The only other time the U.S. faced a credit downgrade was in 2011, when Standard & Poor’s similarly lowered its rating one notch. On the economic front, the US economy created 187,000 new jobs in July while the unemployment rate fell to 3.5%, according to the Bureau of Labor Statistics. The July job report came in below expectations of a total 200,000 new jobs. The slowdown in hiring has a silver lining as many are looking for signs of a cooling labor market in an effort to tame inflation and prompt the Fed to pause future rate hikes.

Weekly Stock Market Recap I S&P 500 Monthly Summary July 2023

7/1/2023

July 28, 2023, Weekly Stock Market Return Recap. For the week the S&P 500 finished up 1%, the Dow +0.7% and the Nasdaq +2%. The equity markets continue to be propelled by positive job reports, high consumer confidence, consumer spending, corporate earnings and higher than expected 2nd quarter GDP numbers. The Federal Reserve hiked the target range for its benchmark interest rate by 0.25% on Wednesday and left the door open to more rate increases. The rate hike increased the interest range to 5.25% and 5.5%, the highest level since March 2001. The Fed reiterated in their view on inflation as "elevated," and they remain "highly attentive" to inflation risks. Further, the Fed stated "Job gains have been robust in recent months, and the unemployment rate has remained low. Inflation remains elevated." The Bureau of Economic Analysis's advance estimate of second quarter US gross domestic product (GDP) showed the economy grew at an annualized pace of 2.4% during the second quarter of 2023 period, faster than consensus forecasts. Economists surveyed by Bloomberg had the US economic growth estimated at an annualized pace of 1.8% during the period. However, despite the previous forecast misses, Wall Street now sees Q3 and Q4 GDP growth slowing to 0.5% and -0.4%, respectively. The S&P 500 has far exceeded most of Wall Street's year-end return predictions, defying concerns over recession risks, inflation, and monetary tightening. The unexpected market surge has forced most strategists to revise their forecasts upwards.

July 14, 2023, Weekly Stock Market Return Recap. Earnings season hit Wall Street running with positive news and these releases moved US stocks upward on the week. The Nasdaq jumped 3.3%, the S&P 500 increased 2.4% and the Dow finished up 2.3%. Consumer prices rose at the slowest pace since March 2021 as inflation showed further signs of cooling in June, rising 0.2% over last month and 3% over the prior year in June. This increase, however, was only a slight acceleration from May's 0.1% month-over-month increase.

July 7, 2023, Weekly Stock Market Return Recap. The Dow fell 2%, the S&P 500 declined 1.2%, and the tech-focused Nasdaq Composite edged down 0.9% for the week. US equity markets continue to be rattled by economic resiliency, reigniting Fed hawkish fears. Indeed, stronger-than-expected average hourly earnings together with upward revisions to wage growth are indicators that more rates increase might be on the horizon. Insofar as the US economy added 209,000 jobs in June missed the Wall Street 225,000 estimates, in turn, the ADP Employment report for June had private employers adding 497,000 jobs, well above Bloomberg consensus estimates for 225,000. The strong economic data drove up Treasury yields, which jumped to some of the loftiest levels on the year with the 10-year Treasury note yield rising to 4.047%

July 1, 2023, Weekly Stock Market Return Recap. The three major equity indexes notched winning weeks, gaining more than 2% each on news that the consumer was still driving the economy. Indeed, US Consumer Sentiment Is Improving according to the University of Michigan sentiment index, which rose to 64.4 in June from a preliminary reading of 63.9; that marked a rebound from a May slump. However, with the stocks clearly back in the bull market, there remains a divide on Wall Street on whether this bull run will last or revert to new lows. The primary golden rule in stock market investing is “don’t fight the Fed” and Fed Chair Powell says inflation isn't returning to 2% this year or next, which translates to more interest-rate hikes ahead. Further, the yield curve remains inverted and historically, after the yield curve inverts, it takes roughly 15-months for the economy to officially enter a recession. Given this benchmark timeline together with the fact that the yield curve inversion occurred about a year ago, the economy could enter a recession in October of this year. History also tells us that most Fed tightening cycles do not end in a soft landing. Over the past 11 tightening cycles, all but three resulted in an economic recession, or statistically there is a 73% chance of recession ahead.

Weekly Stock Market Recap I S&P 500 Monthly Summary June 2023

6/3/2023

June 23, 2023, Weekly Stock Market Return Recap. The stock market reacted negatively to Fed Chair Powell’s statements this week with the S&P 500 and Nasdaq both ending down 1.4% and the Dow Jones falling 1.8%. The broad market index of the S&P 500 decline was the largest since March with most trade days finishing in the red on the week. Powell’s remarks at a House Financial Services Committee hearing Wednesday were perceived as hawkish, characterized with statements “The process of getting inflation back down to 2 percent has a long way to go” and "Nearly all FOMC participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year." The week’s economic news was highlighted by ISM’s Manufacturing New Orders Index which contracted for the ninth consecutive month in May, registering 42.6 percent, a decrease of 3.1 percentage points. Historically, declines below the 43.5 range in the ISM New Orders Index have been a reliable signal of impending U.S. recessions. Indeed, out of the more than one dozen occasions where the ISM Manufacturing New Orders Index has below 43.5, only one proved to be a false-positive for a U.S. recession, and that occurred way back in the 1950s. Another factoid is should a U.S. recession occur, history would suggest that the Dow, S&P 500, and Nasdaq Composite have yet to reach their true bear market lows, as no bear market after World War II has bottomed prior to an official recession being declared.

June 16, 2023, Weekly Stock Market Return Recap. On a bullish Fed rate pause, the S&P 500 finished up +2.6% on the week, marking its best performance since March of 2023. After 10 consecutive interest rate hikes over the past 15 months, the Federal Reserve finally decided to pause during Wednesday’s Fed meeting. This rate pause will give the Fed further time to process incoming economic data and inflation. Yet, it might be premature to take out the party bowl as the Fed's decision comes with the projection of another two 25 basis point rate hikes ahead in 2023; this would move the benchmark rate into the 5.50% and 5.75% range. The market probability tracker shows that the central bank's future rate hikes have about a 60% chance the Fed will hike rates by 0.25% in the next July meeting. Back to the equity markets, it is important to highlight the unhealthy balance in the S&P 500 recovery, as the concentration of stock leaders is the most concentrated since 1970’s. Indeed, seven tech stocks - Apple, Microsoft, Alphabet, Amazon, Nvidia, Tesla and Meta - have accounted for most of the S&P 500’s recovery with 40%-80% range bound gains, while the other 493 stocks are largely flat in aggregate. Moreover, the top five stocks now represent nearly one-quarter of the S&P 500 market capitalization. Those lopsided percentages are even higher than at the peak in the dot-com bubble of 2000, where the market lost 43% of its value over three years. Unless the breadth of stock participation in the rally expands, this does not bode well for the sustainability of the stock market recovery. Therefore, client portfolios will remain diversified with neutral risk standing until which time we see both more supportive economic data and broader market sector participation in stocks.

June 9, 2023, Weekly Stock Market Return Recap. Stocks rose on the week moving the S&P 500 broad market index into new bull market territory with a +20% recovery from the lows back in October of last year. For the week, the S&P 500 finished up 0.4%, the Dow gained 0.3% and the Nasdaq eked out 0.1%. However, over one half of the 11 sectors in the S&P 500 are still in the red, while Information Technology (+35%) and Communication Services (+33%) sectors are largely carrying the index upward on the year. Yes, insofar as the sector participation breadth has increased in June from previous months, the fact that technology and to a smaller part, consumer discretionary, are driving the positive equity index market gains on the year is a sign the lingering problems for the prospects of a healthy, sustainable bull market.

June 2, 2023, Weekly Stock Market Return Recap. Stocks buoyed on jobs data and debt default averted. For the week, the S&P 500 rose 1.82%, the Dow added 2.02% and the Nasdaq gained 2.04%. A lot of positive developments on the week with the government debt ceiling suspended for two years and unemployment jumping to a seven-year high at 3.7%; in particular, the easing of labor spiked sentiment that the Federal Reserve may skip a rate hike in two weeks.

Kip Lytel CFA Weekly S&P 500 Stock Market Review Recap I For the Month of December 2024 I Montecito Capital Management