The Strength of the Market is: Weak but Strengthening
Investors digested strong corporate earnings and looked past concerns about high inflation and a recession. Last week, stocks rose to a winning week and the best month of 2022 - the Dow Jones ended higher by nearly 3%, while the S&P 500 was up 4.3% and the Nasdaq Composite gained about 4.7%. After six months of tumbling into bear market territory, stocks reversed course with hopes that inflation has peaked. In the near-term, the stock market may have hit its lows. Still, worries over inflation, interest rate hikes, a slowing economy and the ongoing war in Ukraine could turn the market back down at any moment. In our view, investors should take a cautiously optimistic view on the direction of the stock market.
Economic reports from last week came mostly negative: •National Economic Activity - worse than expectation •Manufacturing (Dallas) - worse than expectation •Manufacturing (Richmond) - better than expectation •Residential Real Estate Prices - worse than expectation •New Home Sales - worse than expectation •Pending Home Sales - worse than expectation •Consumer Confidence - worse than expectation •Consumer Sentiment - better than expectation •Personal Income - better than expectation •Jobless Claims - worse than expectation This week, investors will look for guidance from economic reports like Construction Spending, Vehicle Sales, Job Openings, Employment, Consumer Credit and Jobless Claims.