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Perspectives

Volatility to Continue in Both Directions

by Fortem Financial April 29, 2024

After three straight weekly declines, equities were higher last week (S&P 500 +2.68%). Corporate earnings, especially big tech, were a key driver. Best sectors were technology (+5.11%) and consumer discretionary (+3.52%); worst sectors were materials (+0.66%) and energy (+0.74%).

 

  1. 1Q GDP came in lower than expected (1.6% vs 2.4%), but internals were generally okay. Core PCE inflation, however, was expected to be 3.4% but instead came in at 3.7%.
  2. After last week's stronger than expected inflation reports, market participants reduced the number of Fed cuts expected by year end to just one. Inflation remains sticky, but the bar to raise rates is very high.
  3. PMIs suggest growth in the U.S. might be slowing. The manufacturing index declined to contraction territory of 49.9 from 51.9 falling short of expectations of 52. The services PMI also disappointed, coming in at 50.9, verses expectations it would improve from 51.7 to 52.
  4. Excess savings are dwindling and have litter scope to support consumption further. Lending standards are tight and borrowing costs are on the rise; income growth- arguably the largest driver of consumption growth- has already decelerated; and forward-looking indicators suggest further weakness ahead.
  5. The middle class is the pivotal class for consumption. They are beginning to show fatigue with slowing incomes and some joblessness.
  6. Early observations in earnings are that EPS are trending above expectations but revenue shortfalls are more prevalent than usual.
  7. Until recently, equity sentiment has been very bullish (a contrarian cautionary signal). Over the last two weeks, sentiment has turned neutral.
  8. The 10-largest stocks in the S&P 500 are now 33.5% of the index, another new all-time high.

Source: Bob Doll, Crossmark Investments

 

Market and Index Changes for the Week Ending 4/26/2024

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

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The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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