Insightful Articles

The Market Rally Equity markets have begun the year on an uptrend, driven by various factors, including lower inflation data and growing expectations that the Federal Reserve may end its interest rate hikes soon. Some speculate that the Fed may even lower rates later in the year. The S&P 500 finished the week at 4070, surpassing key technical indicators such as the 50-day, 100-day, and 200-day simple moving averages and breaking a long-standing trendline. This is considered to be a bullish signal, indicating that the market could continue to rise in the near term. It's worth noting that the S&P 500 recently reached this level on November 30th and September 12th, indicating that there may also be resistance at this price point.

An update on the current market and economic conditions. The Fed says one thing about where interest rates are going and how long they will stay there, but the market isn’t buying it. Why I believe we are in or on the cusp of a recession.

Today’s JOLTS Report showed an increase in the number of job openings. A tight labor market is a headwind for inflation and may mean that the Fed has more work to do, and rates may be higher for longer.

Earnings season kicked off in earnest this week, and some common themes are developing. Most of the banks who have reported had solid earnings but are increasing their loan loss reserves in anticipation of a weakening economy, factoring in the possibility of an impending recession and an increase in loan defaults.

This week’s strong employment data is fueling fears that the tight labor market is contributing to inflation, and the Fed will need to raise interest rates further in response.

On December 12th, 1961, the S&P 500 hit a near-term high; 196 days later, on June 26th, the S&P 500 bottomed down 28%. The market rallied through the Summer, rising 13% into August. Then the market traded down 10% into late October before staging a fourth-quarter rally, gaining 18% into year-end.