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what is going on with the market

Fourth-quarter earnings season kicked off in mid-January, and results have been somewhat disappointing up to this point. S&P 500 companies have reported a 1.4% year-over-year decline in earnings per share in the quarter, putting the market on track for its fourth consecutive annual earnings decline in the past five quarters. The consumer price index gained just 3.4% year-over-year in December, down from peak 2022 inflation levels of 9.1% but still above the Federal Reserve’s 2% long-term target. Unfortunately, December’s CPI inflation reading was up from 3.1% annual inflation in November and above economist expectations of 3.2%. The US Consumer Price Index Tuesday showed prices in August rose a bit.

Three in particular were solidly in green thanks to strong earnings. Even with the index at all-time highs, analysts still see more gains ahead over the next 12 months. The consensus S&P 500 price target of 5,280 suggests about an 8% upside from current levels. S&P 500 companies may be struggling with earnings growth, but investors seem to be shrugging off stagnant fourth-quarter numbers and anticipating extremely strong earnings growth in 2024.

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Stocks were soaring in midday trading Thursday, despite the fact that the consumer price index rose more than expected. All 30 Dow stocks were higher, with the energy and financial sectors posting the biggest gains. Mortgage applications rose last week, the first time since June 24 that volume increased on a week-to-week basis, according to the Mortgage Bankers Association. Total mortgage demand increased 1.2%, helped by the average 30-year fixed mortgage rate recording its biggest weekly drop since 2020. Applications to buy a home increased 1% compared with the previous week, while refinance applications rose 2%, the MBA said.

  1. If those gains hold, the Dow will wind up with its biggest percentage and points gains of 2022, topping a 2.8% jump from early May.
  2. With the S&P 500 now back at all-time highs, some analysts are growing concerned about how much growth is already priced into stock prices at their current level, particularly in the high-flying technology sector.
  3. Wall Street analysts are expecting earnings to rebound in the first half of 2024, projecting a 4.6% increase in S&P 500 earnings in the first quarter and another 9.4% growth in the second quarter.
  4. German inflation fell for a second straight month in February, coming in slightly lower than expected, likely a relief for European Central Bank policymakers as they consider when to first cut interest rates.

Those three groups stand to get hit the hardest if the Federal Reserve raises interest rates even more aggressively to try and get inflation under control. Shares of CVS Health rose Wednesday after the company raised its full-year profit outlook and topped Wall Street’s expectations with its second-quarter results. CVS now expects adjusted earnings between $8.40 and $8.60 per share this year, up from its prior guidance of $8.20 to $8.40. The company, which in addition to activtrades metatrader 4 its drugstores owns health insurer Aetna, saw second-quarter sales rise 11% year over year to $80.64 billion, topping Refinitiv estimates of $76.37 billion. Adjusted earnings per share in the quarter of $2.40 also exceeded analyst estimates of $2.17. The January personal consumption expenditures price index came in line with the Dow Jones’ consensus expectations, emphasizing the possibility that the Federal Reserve will make the first of its rate cuts starting in June.

The S&P 500 communication services sector is reporting the highest earnings growth of any sector so far in the fourth quarter, with EPS up 40.4% from a year ago. The energy sector has reported a 31.4% year-over-year drop in earnings so far in the fourth quarter, weighing on overall growth. Already, the Fed has raised rates by a historic half point and then twice by three quarters of a point.

All three major indices closed down more than 1% on the heels of the report. Pending sales slumped 4.9% for the month, much worse than the 2% projected increase from the Dow Jones consensus. “Large, fast-growing companies have been some of the market’s best performers. But things can change quickly,” Fasciano said about the market rally. The gap between actual performance and what investors are willing to pay for different companies “creates a dilemma and a potential opportunity for portfolio managers,” Fasciano said.

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Even though the hotter-than-hoped-for inflation report is sparking fears of more big rate hikes from the Federal Reserve, some optimists are starting to see light at the end of the Fed tightening tunnel. If that’s true, inflation pressures could finally start to subside more dramatically. Investors may be hoping that’s the case, which is one reason to justify the big stock market surge Thursday. So with rents rising dramatically over the past year (along with housing prices), it’s no wonder that CPI numbers continue to come in higher than expected. But there is some confusion about whether rent increases are finally peaking or not.

Many companies in the market have relatively attractive valuations compared to somewhat challenged fundamentals, according to Commonwealth Financial Network portfolio manager Chris Fasciano. Wednesday evening the company announced plans to do a $550 million offering, hoping to cash in on the intense interest that followed the release of phase 2 clinical trial results on Tuesday. Viking is developing a GLP-1/GIP receptor agonist that is showing strong early results in helping patients with obesity.

what is going on with the market

Although she forecasts the rotation out of the Magnificent Seven names will continue, investors appear to have enough risk appetite to remain in the market, she added. The West Texas Intermediate contract for April lost 28 cents, or 0.36%, to settle $78.26 a barrel. The April Brent contract, which expires Thursday, fell 6 cents or 0.07% cryptocurrency broker canada to settle at $83.62 a barrel. Personal income rose 1% month-over-month in January, well above the forecast for 0.3%. Pullbacks can be opportunities for asset accumulation if an investor is prudent and judicious in selecting their investments. However, downturns often result in hive thinking, with market participants selling in droves.

Although annual inflation fell compared to July, it didn’t fall as much as economists expected. That could give the Fed license to hike interest rates even faster and higher than forecast. The news wasn’t much better for investors in the broader market.

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The S&P 500 was down more than 3% and just four stocks in the blue chip index were in positive territory. Agriculture company Corteva (CTVA) was the S&P 500 leader, gaining 2% following news of a stock buyback. Fertilizer stocks CF Industries (CF) and Mosaic (MOS) and chemicals company Albemarle (ALB) were higher too. It was a broad-based slide, with all eleven sectors of the market heading lower. Tech stocks, retailers and banks were among the biggest losers.

Snowflake, among Thursday’s biggest premarket movers

Traders may have made the mistake of assuming that inflation would soon no longer be a major economic problem. Wall Street’s big fear is that higher rates will eventually lead to an economic slowdown or even a recession. As stocks settle after the trading day, levels might still change slightly.

At the same time, the economy has remained so strong that some economists are concerned about the possibility it will grow too much in 2024 and inflation will rebound. However, the bond market is pricing in a 20% chance the Fed will cut interest rates by at least 25 basis points at its March meeting, according to CME Group. The situation on Wall Street was ugly midmorning Tuesday, as investors grew increasingly nervous about the prospect of even higher rate hikes that could last for a longer period of time.

“The broader market looks more prone to consolidating its gains from November and December rather than rallying to new highs,” Ma says. Wall Street analysts are expecting earnings to rebound in the first half of 2024, projecting a 4.6% increase in S&P 500 earnings in the first quarter and another 9.4% growth in the second quarter. U.S. gross domestic product growth of 3.3% in the fourth quarter also came in hotter than the itrader review 2% growth economists had expected. Investors will be particularly interested in the FOMC’s January meeting minutes, expected to come out on February 21. They will be looking for any commentary or hints from Fed officials about the outlook for inflation, the U.S. economy or interest rates. The market has grown increasingly nervous that the Fed will raise rates faster and higher than expected to get inflation under control.

Crude oil futures are headed for a second consecutive monthly gain as OPEC+ is expected to extend its production cuts and the latest inflation data was in line with expectations. Meanwhile, pending home sales posted a surprise drop in January amid swings in mortgage rates. Pending sales declined 4.9% for the month, much worse than the 2% projected increase from the Dow Jones consensus. Thursday’s session caps off February trading and a fourth straight positive month for Wall Street, despite a string of declines raising questions around the sustainability of the AI-driven rally. The S&P 500 climbed 5.17%, while the Dow added 2.22% for its first four-month winning streak since May 2021. For the second straight week, a chipmaker will host an event to debut new technology and tout the AI power of its products.

Stocks roared back in late morning trading after plunging at the opening bell. The Dow, S&P 500 and Nasdaq were all soaring in late morning trading. Jeffrey Buchbinder, chief equity strategist for LPL Financial, says investors should keep their expectations in check given the S&P 500’s elevated valuation. Not surprisingly, the technology sector has the highest forward P/E ratio of all at 28.3 followed by the consumer discretionary sector at 24.4.

Still, the cryptocurrency is about to notch a 45% gain for February and is on pace for a 21% weekly gain. Data released on Thursday showed the Federal Reserve’s preferred measure of inflation was stubbornly above the central bank’s target in January, but at least didn’t exceed Wall Street forecasts. There have been 20 other occasions when the S&P 500 index posted a calendar year gain of 20% or more and experienced a decline of at least 5% in the subsequent year. When such a decline, after a big gain in the previous year, has happened in the first half of the new year, and it has on 12 occasions, the market has gotten back to break even 100% of the times.