Market Trader Report | Apr 28, 2024
Market Trader Report | Apr 28, 2024
What is included in this week's edition?
WEEKLY REVIEW: An overview of current market standing, fundamental matters with implications upon the market, and general sentiment regarding the major US indices.
LOOKING AHEAD: Key takeaways to consider as we look forward to the upcoming trading week.
MARKETS: A technical review of the major indices and commodities that represent the overall health of the market.
Market Trader by MyntBit
Issue# 17
This week, despite concerns sparked by a disappointing first-quarter gross domestic product (GDP) report indicating lower-than-anticipated consumer spending amidst persistent inflationary pressures, stocks managed to climb. The surge in the market was primarily fueled by the performance of technology stocks as the first-quarter earnings season gained momentum. Furthermore, March's personal consumption expenditures (PCE) inflation figures largely aligned with expectations, reinforcing the market's belief that the Federal Reserve (Fed) will hold off on rate cuts until later in the year. Noteworthy updates included developments in the housing market, purchasing managers' indexes (PMIs), and durable goods orders. Looking ahead, investors will be closely monitoring the Fed's policy meeting, as well as various labor market updates such as the April jobs report, alongside ongoing releases of first-quarter earnings.
Weekly Market Review
Inflation has maintained its prominence throughout this year, with the futures market adjusting its expectations accordingly. Initially, in January, it anticipated approximately six interest rate cuts for the year, but as of April 26, 2024, it now predicts only one to two cuts. The March figures for Personal Consumption Expenditure (PCE) inflation largely reinforced this outlook, showing neither a significant cooling that might prompt earlier rate cuts nor a postponement of such actions. Both core and headline PCE inflation slightly exceeded or met consensus expectations, with a 0.3% month-over-month increase and a 2.8% year-over-year increase for core PCE, and a 0.3% month-over-month increase and a 2.7% year-over-year increase for headline PCE. Despite this, signs of economic vitality were apparent in personal income and spending, with the latter surpassing consensus forecasts. However, these figures present another obstacle to achieving sustained progress towards the 2% inflation target.
Contrary to consensus expectations of 2.5% growth, the first print for quarter-over-quarter annualized GDP growth on Thursday reported only a 1.6% increase. This downside surprise was primarily attributed to diminished exports, indicative of weak international economies, and lower inventories. However, consumer spending registered a robust 3.1% growth, particularly evident in the services sector, which experienced a 4.0% annualized growth rate, its highest pace since 2021. The GDP report also underscored persistent inflationary pressures, with the quarterly PCE price index exceeding consensus forecasts at a quarter-over-quarter annualized rate of 3.4%. Core PCE also rose more than expected, reaching 3.7% quarter-over-quarter annualized.
In response to the report, stocks declined and Treasury yields rose amid growing concerns about the impact of ongoing robust services activity and elevated inflation, primarily driven by these sectors. Other updates this week included S&P Global's Purchasing Managers' Index (PMIs) for manufacturing and services, durable goods orders, and housing market data. The manufacturing PMI for April fell to 49.9, slipping back into contraction territory after last month's brief expansion above 50. On the other hand, the services PMI remained in expansion territory but decreased month-over-month to 50.9. Durable goods orders slightly exceeded consensus forecasts with a 2.6% month-over-month pace after a downward revision in the previous month, suggesting that firms may still be exercising caution regarding demand prospects, thus moderating their investment. In housing market data, both new and pending home sales for March surpassed consensus expectations and showed an increase compared to the previous month.
Weekly Performance Heatmap
Overall Stock Market Heatmap & Sector Performance
Looking Ahead to the Upcoming Week
Amidst a packed schedule of significant releases this week, all eyes will be on the Federal Reserve's meeting scheduled for April 30 to May 1. Investors will closely monitor labor market data, starting with the April jobs report due on Friday, preceded by updates on the Employee Cost Index, nonfarm productivity, and unit labor costs for the first quarter, alongside April's private employment figures and the March Job Openings and Labor Turnover Survey (JOLTS). Additional reports with potential market impact include April's manufacturing and services PMIs from both the Institute for Supply Management and S&P Global. Also on the radar are the MNI Chicago PMI, consumer confidence figures, and factory orders. The agenda further includes updates on construction spending, the Dallas Fed's regional manufacturing survey, and various indicators of home prices.
In China, attention will be on April's PMIs for the manufacturing and services sectors, encompassing both official government releases and private manufacturing data from Caixin. From Japan, key releases include industrial production, retail sales, the jobless rate, housing starts, and finalized April manufacturing PMI figures. Elsewhere in the region, South Korea's Consumer Price Index (CPI), trade balance, industrial production, and manufacturing PMI will be scrutinized, along with Australia's trade balance, building approvals, retail sales, and private sector credit.
Turning to Europe, the focus will be on the advance prints of first-quarter GDP and April CPIs, as well as updates on consumer confidence, the unemployment rate, and finalized April manufacturing PMIs. From Germany, attention will be on April's unemployment claims and March's retail sales figures, while French releases will include March's Producer Price Index and industrial production data. Additionally, the U.K. is scheduled to release mortgage approvals and house price information.
Notable Earnings
Important Economical Events
Markets
Below are the levels for the upcoming week - updates will be provided on X (previously Twitter) throughout the week.
SPY - SPDR S&P 500 ETF Trust
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Support: $500 | Resistance: $515
After a turbulent week, the market has regained its footing and bounced back, now surpassing the $500 mark. With the Federal Open Market Committee (FOMC) meeting scheduled for next week, we can anticipate another potentially volatile week ahead.
QQQ - Invesco QQQ Trust Series 1
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Support: $415 | Resistance: $440
Following the earnings reports from companies like Alphabet (GOOGL) and Microsoft (MSFT), the technology sector experienced a rebound. We observed a bounce from our support level around $415 to our resistance level at $430. The upcoming focus will be on the Federal Open Market Committee (FOMC) meeting.
IWM - iShares Russell 2000 ETF
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Support: $190 | Resistance: $200
With recent attention on inflation and the impending FOMC meeting, small-cap stocks are poised to reflect market sentiment. The $200 mark remains a crucial level to watch closely.
DIA - SPDR Dow Jones Industrial Average ETF Trust
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Support: $375 | Resistance: $390
The Dow, particularly in conjunction with small-cap stocks, appears relatively weaker compared to other segments of the market.
VIX - Volatility S&P 500 Index
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Support: $15 | Resistance: $20
The VIX experienced a spike last week, breaching the $20 mark, but it has since retreated to under $16. However, we anticipate volatility to increase this week, especially with the FOMC meeting on the horizon.
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