Financial Market Report: Positive Results on Friday
The major U.S. stock market indices all saw a boost in value on Friday. The rise of 169 points, or 0.5%, brought the Dow Jones Industrial Average to 33869. The S&P 500 index increased by 9 points, or 0.22%, to close at 4090. The Nasdaq Composite, on the other hand, fell 71 points, or 0.61%, to close at 11718.
Market-Affecting Factors
A spike in bond rates was blamed for the 1.1% decrease in the S&P 500 during the previous five sessions, which was the worst drop since mid-December. This gave markets the impression that the U.S. central bank could need to raise borrowing costs more than originally planned.
The terminal rate had previously been predicted to stay below 5%, a low peak that had spurred a significant stock market rise at the beginning of the year. The market is currently waiting anxiously for Tuesday’s publication of the Consumer Price Index (CPI) report for January to see how the recent hawkish tone of the Federal Reserve’s speech affected the terminal rate.
Stephen Innes, the managing partner at SPI Asset Management, believes that a stronger CPI figure might signal a trend rather than a one-time occurrence, thereby influencing how the market views the terminal rate. Ipek Ozkardeskaya, a senior economist at Swissquote Bank, adding that if the inflation rate doesn’t moderate or slightly increases on an annual basis, the results of this week’s U.S. inflation report might cause panic and anarchy.
monetary updates
The New York Fed’s 1-year and 5-year inflation expectations poll will be released on Monday at 11 a.m. Eastern time, which marks the beginning of a relatively quiet week for U.S. economic news. 69% of the S&P 500 businesses have so far disclosed their results, and 69% of those results have above the mean EPS expectation. However, this is less than the 77% and 73% 5-year and 10-year norms, respectively.
Earnings have outperformed projections by 1.1%, which is also less than the averages over the previous five and ten years of 8.6% and 6.4%, respectively. The numbers are disappointing, according to Factset’s Senior Earnings Analyst John Butters.
The S&P 500 closed below 4,100 last week after breaking out above it in early February, according to Jonathan Krinsky, the Chief Technical Strategist at BTIG, raising the possibility of a false breakthrough. He continued, saying that this occurs at a time when momentum is waning, the currency and rates are rising, we are approaching a seasonally bad phase, and mood and positioning have changed significantly since late December.