Market Drama

• Welcome to this week’s Market Drama!

Stock Market Updates:

• The S&P 500 was down 3% for the week. Down 5.5% from the recent highs.
  • 3rd week in a row that we’ve seen the market go down.
• Nasdaq was down even more, 5.5%. Down 7% from the recent highs.
• Oil was down 4% YoD. Oil is now 14.6% up for the year.

3 Factors Affecting the Market: 

1. The Stock Market is repricing because the Federal Reserve is likely to reduce interest rates just once this year, rather than the anticipated three times. It is now expected that interest rates stay higher for longer. 

• The Treasury yield has gone from 4.3% up to 5%. Telling us that treasury investors are expecting 2 years from now for interest rates to be closer to 5% rather than 4.3%. 
• Why the repricing? Inflation is coming down and not at the pace that the stock market was expecting. 

2. Geopolitical tensions in the Middle East have been rising, affecting oil prices. Right now, oil prices seem to have stabilized, oil was down 4% last week.

3. S&P 500 quarterly earnings are underway. Although companies are beating forecasts, the outlook for future earnings that they’re offering has been softer than expected, specifically the banks. 

Coming up next week:

• First quarter GDP numbers
• PCE inflation data
• Earnings from tech companies

Stay tuned for next week.

– Andres