MarketSurge powers the charts in this video.
The SP500 followed through and made new all-time highs last week. The reason is not that the Fed hasn’t increased interest rates in the face of high and rising inflation. It is not that there might be another peace agreement in the Middle East – the last one lasted only a couple of weeks. Almost 90% of the S&P 500 have already reported, and the index is on track to more than 50% year-over-year earnings growth. The question is how much of that is already priced in?
Not everything was roses and rainbows last week. Memory leaders WDC and SNDK absolutely crushed earnings estimates and still sold off harshly, reminding us that the sentiment in some AI areas is still sour. One of the cybersecurity leaders, DDOG, also beat estimates and declined 20%. In all of those cases, the market had already priced in the good news. The true earnings surprises are reflected in the market reaction. CRSR gained 35% and finished near its daily highs. SHOP and TWLO gapped up 20% and finished near their weekly highs. The same with PLTR and TEAM.
The jobs report came well below estimates -23k vs expected 85k. Counterintuitively, this might be good news for the stock market because it reduces the chances of a rate hike later this year. The Fed had a dual mandate – under 2% inflation and full employment. The latter is more important, especially in an election year. Maybe this is why we finally saw metals to wake up. The week was strong for gold, silver, copper, and steel, which benefited from the latest sector rotation.
From a 10,000-foot view, the indexes just had a high-volume range expansion followed by a few days of sideways consolidation. People are looking for more risk – stocks in highly speculative areas like space, nuclear, solar, AI applications, rare earth metals, etc., are bouncing.
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