CWS Market Review – February 16, 2024
“The obvious rarely happens; the unexpected constantly occurs.” – Jesse Livermore
This week, the S&P 500 broke 5,000, then lost it, then re-broke it. Then on Tuesday, a surprisingly high inflation report rattled the index for its worst daily loss in nearly a year.
Still, we have to recall just how strong and consistent this market has been. Since late October, the S&P 500 is up more than 20%, and there have only been minor pullbacks. Much of this rally has occurred in the hope that that the Federal Reserve was ready to start slashing interest rates.
It now looks like that Fed rate cut won’t happen until June, possibly later. Traders are starting to resemble Linus in the pumpkin patch waiting for the Great Pumpkin to come. But instead of the Great Pumpkin, they’re waiting for the Great Jay Powell.
We got another shock on Thursday, when the government said that retail sales dropped 0.8% in January. That was worse than expected. Wall Street had been expecting a modest decline of 0.3%. Excluding autos, sales fell 0.6%, while Wall Street had been expecting a gain of 0.2%. The numbers for December were also revised lower.
On Thursday, the Fed said that industrial production fell 0.1% last month. Wall Street had been expecting an increase of 0.2%. This data series has been sluggish for several months. These are troubling signs.
On the earnings front, the end of Q4 earnings season is in sight. We had three Buy List earnings reports this week. We got a beat, a miss and a match. I’ll break down what happened. I’ll also preview the Buy List earnings reports we have on tap for next week. Let’s jump right in.