The Strength of the Market is: Strong

Last week, all of the major stock averages notched a winning week - the Dow Jones posted a 1.75% gain, snapping a four-week losing streak, the S&P 500 was up 1.90% and the Nasdaq was higher by 2.58%. Financial markets continue to be very sensitive to interest rates and the expectations of the Federal Reserve. Investors need to be prepared that if inflation numbers don’t cool, there is a rising possibility of higher interest rates. Without lower inflation, the stock market is unlikely to be able to sustain a continuous rally. Economic reports from last week came back mostly negative: •Pending Home Sales - higher than expectation •Single-Family Home Values - higher than expectation •Manufacturing (Dallas) - lower than expectation •Manufacturing (Richmond) - lower than expectation •Consumer Confidence - lower than expectation •Construction Spending - lower than expectation •Vehicle Sales - lower than expectation •Labor Productivity - lower than expectation •Jobless Claims - lower than expectation This week, investors will look for guidance from economic reports like Consumer Credit, Employment, Job Openings and Jobless Claims.