1q24 EPS Reports Begin

Sitting in the heart of the quite period, equities broadly struggled to overcome higher long-term interest rates. The S&P 500 dropped –0.95% on the week.  This was its worst week since the beginning of the year. Strong economic data sent most interest rate maturities higher.  Rate-sensitive defensive areas like real estate and utilities fell while cyclical sectors were flat to marginally higher. Lower quality growth stocks fell the most. Higher-quality value stocks were the week’s best performers.

 

Investor surveys show market sentiment closing near multi-year highs, raising concerns of a possible stock market pullback during a usually soft seasonal time. Foreign stocks outperformed last week and have kept pace with their U.S. counterparts over the past two months.  Japanese equities continue to shine year to date but underperformed last week.

 

Year to date, energy remains the best performing sector, however we now enter a weaker time for energy equities. Oil prices rose above $85/bbl for the first time since October and finished at $87/bbl last week. Restrained OPEC production, slightly improved China growth sentiment, and fresh concerns around trouble in the Middle East have driven oil up +12% since Mid-March. Gasoline prices rose over $3.50/gal.

Safety areas such as staples and healthcare remain year to date laggards globally.

 

Fed rate cut expectations sit between 2-3 rate cuts in 2024. Like the “Goldilocks”, bull-market run in 1995, the markets expect the first interest rate cut in July. Fed Chair Powell reiterated conviction that the Fed would cut rates this year. 10-year Treasury yield tried multiple times last week to rise above 4.40%, ending the week, up 20 bps.

 

Click here to watch: Oak Harvest Weekly Stock Talk: Market Analysis Scenario 1 – Soft Landing rolls on, S&P 500 = 6000