Stock Market Update: Week in Review
Stocks Finish Last Week Lower After Sell-Off in Tech
Last week, stocks saw a decline in the market following a sell-off in the tech industry, with the Nasdaq Composite leading the losses and falling over 1%.
Equal-Weighted S&P 500 Logs 7th Straight Weekly Gain
Despite the sell-off in tech, the equal-weighted S&P 500 managed to log a weekly gain for the 7th consecutive week. Investors are beginning to shift their focus away from the “Magnificent Seven” tech leaders and are looking for other sectors to drive the market rally.
Upcoming Economic Calendar and Earnings
Looking ahead, investors can expect some key events in the coming week. The February Consumer Price Index (CPI) report will be released on Tuesday, providing an updated look at inflation. Retail sales and consumer sentiment reports are also scheduled to be released in the latter half of the week.
From the earnings side, a lighter schedule is expected with companies such as Dollar Tree, Dollar General, Dick’s Sporting Goods, Adobe, and Ulta Beauty set to release their quarterly reports.
Federal Reserve and Inflation Outlook
Federal Reserve Chair Jerome Powell has repeatedly emphasized the central bank’s desire for increased “confidence” in the decline of inflation before considering interest rate cuts.
The upcoming CPI report for February follows a hotter-than-expected January report, hinting at inflation’s potential to be “bumpy.” Investors have since adjusted their expectations for interest rate cuts.
Forecasters expect a 3.1% annual gain in headline inflation for February, unchanged from January. Additionally, prices are projected to rise 0.4% on a month-over-month basis, a slight increase from January’s 0.3% rise.
Core inflation, which excludes food and energy, is expected to have increased by 3.7% year-over-year, down from January’s 3.9% increase. Monthly core prices are expected to rise by 0.3%, a decrease from the 0.4% increase in January.
Retail Rebound and Economic Growth
In January, retail sales experienced a steep decline, but economists anticipate a rebound in February. They project a 0.8% month-over-month growth in retail sales and a 0.2% increase excluding autos and gas.
Economists believe that the rebound in retail sales is linked to both the weather-related weakness in January and a stronger tax refund season. With a growing economy, consumption growth is expected to maintain a strong pace.
Shift in Market Action
Following Friday’s jobs report, the stock market experienced a notable shift in trading action. After weeks of an AI-fueled rally in tech stocks, certain tech trades, including Nvidia, Arm Holdings, and Dell, saw a significant decline.
This shift correlates with a larger trend known as the “Magnificent Seven trade” which has emerged. However, strategists speculate that a broadening of the market rally is on the horizon as performance from tech giants like Apple and Tesla begins to lag.
Optimistic Economic Forecasts and Corporate Outlook
Market analysts and economists have been calling for a broadening of the market rally in 2024. Increased earnings forecasts for industries beyond the tech sector and positivity in the US economy are contributing factors to this belief.
The February jobs report showcased continued strength in the labor market, leading some economists to revise upwards their outlook for GDP in the second quarter.
Recent earnings calls have revealed fewer companies mentioning a potential recession, indicating a more optimistic corporate outlook. Positive economic forecasts are expected to impact earnings across various sectors, not just tech stocks.
Weekly Economic Calendar
Monday
- New York Fed one-year inflation expectations, February
- Earnings: Asana, Casey’s, Oracle, Vail Resorts
Tuesday
- NFIB Small Business Optimism, February
- Consumer Price Index, month-over-month, February
- Core CPI, month-over-month, February
- CPI, year-over-year, February
- Core CPI, year-over-year, February
- Real average hourly earnings, year-over-year, February
- Earnings: Allbirds, Clover, Kohl’s, Manchester United, ONON
Wednesday
- MBA Mortgage Applications, week ending March 8
- Earnings: Dollar Tree, Lennar, Vera Bradley, Williams-Sonoma
Thursday
- Initial jobless claims, week ending March 9
- Retail sales, month-over-month, February
- Retail sales ex auto and gas, February
- Producer Price Index, month-over-month, February
- PPI, year-over-year, February
- Earnings: Adobe, Blink, Build-A-Bear, Dollar General, Dick’s Sporting Goods, Ulta Beauty
Friday
- University of Michigan consumer sentiment, March preliminary
- Import prices, month-over-month, February
- Export prices, month-over-month, February
- Industrial production, month-over-month, February
Disclaimer: The information provided in this article is for informational purposes only and does not constitute financial advice. The news website does not assume any liability or responsibility for any financial decisions made based on the information provided herein.
