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.
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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.

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.”

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.

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.

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.

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.

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.

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.

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.

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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.

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%.
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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.

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.