Presented by The PensionmarkMeridien Team, May 14, 2024
Last week, as earnings season started to wind down, major U.S. stock indexes traded on the quiet side, with the overall trend being higher.
Tallying the week, the S&P 500 rose by 1.85%1, the NASDAQ 100 increased by 1.51%2, and the Dow Jones Industrial Average saw an uptick of 2.16%3.
THREE IN A ROW
Major U.S. stock indexes made it three weeks in a row of gains, with the S&P 500, NASDAQ, and Dow all higher. As of Friday’s market close, major U.S. stock indexes were slightly lower than their record-high levels posted in early April.
VOLATILITY DECLINES
After some recent investor anxiety in April, the CBOE Volatility Index fell by nearly 7% last week, reaching lows not seen since March4.
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CONSUMER SENTIMENT SOFTENS
According to the monthly University of Michigan’s Surveys of Consumers5, inflation fears have spooked consumers.
The monthly survey showed consumer sentiment declined about 13% in May from April levels following three months of little change.
“While consumers had been reserving judgment for the past few months, they now perceive negative developments on a number of dimensions,” said6 Joanne Hsu, the survey’s director. “They expressed worries that inflation, unemployment, and interest rates may all be moving in an unfavorable direction in the year ahead.”
Many have been surprised that such a change in sentiment has not happened earlier, as the inflationary toll on middle-class Americans has been steady for a prolonged period. Could the consumer be the chink in the armor of this economy, finally?
S&P 500 EARNINGS
As of May 10th, with 92% of S&P 500 companies reporting actual results, blended Q1 year-over-year earnings growth (which combines actual and estimated results) was 5.4%7 for the S&P 500.
Should 5.4% be the actual growth rate for Q1 once all S&P 500 earnings are totaled, it would mark the highest year-over-year earnings growth rate for the S&P 500 since the second quarter of 2022. Not too shabby!
First quarter S&P 500 earnings growth was heavily concentrated8 among five names: NVIDIA, Alphabet, Amazon.com, Meta Platforms, and Microsoft.
ECONOMIC DATA INCOMING
It’s a data-heavy week, with the Producer Price Index release on Tuesday at 8:30 a.m. and the Consumer Price Index release at 8:30 a.m. on Wednesday. Additionally, retail sales data will be released on Wednesday, which could garner more attention than usual after the dip in consumer sentiment last week.
THE TAKEAWAY
Last week was one of those “smooth sailing” weeks that are quite enjoyable as a long-term investor, as time in the market takes care of itself versus ”timing” the market.
Time in markets is what matters. It is the discipline and consistency of a long-term investor that allows weeks like last week to be enjoyed to their fullest!
Market narratives are dynamic, and we are now seeing a healthier narrative with supportive earnings overall for Q1 2024, yet so much hinges upon upcoming inflation data. Markets want rate cuts, and as of last week’s market close, it looks like July or September 9 is expected by rate cut bulls. Of course, that is subject to change.
With that overview noted, it is sure to be an eventful week. If there is anything on your mind regarding your investment portfolio, please feel free to call or email us using the contact information below.
We are always here as a resource for you.
The PensionmarkMeridien Team may be reached at 866-871-9963 or meridienteam@pensionmark.com
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Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Citations:
1. Trading View, May 12, 2024
2. Trading View, May 12, 2024
3. Trading View, May 12, 2024
4. Trading View, May 12, 2024
5 Surveys of Consumers University of Michigan, May 2024
6. CNBC, May 10, 2024
7. Fact Set, May 10, 2024
8. Fact Set, April 22, 2024
9. Reuters, April 29, 2024
10. Forbes, May8, 2024
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Pensionmark Financial Group, LLC (“Pensionmark”) is an investment adviser registered under the Investment Advisers Act of 1940. Pensionmark and WIA Holdings, LLC (“World”) are affiliated through common ownership with Pensionmark Securities, LLC. Securities offered through Pensionmark Securities, LLC (Member FINRA/SIPC).