top of page
  • Scott Poore, AIF, AWMA, APMA

Rate Hike Fears Abate For The Week

Equities broke a 4-week losing streak as economic data helped relieve Fed fears, temporarily. With most of Q4 earnings season completed, 68% of S&P 500 companies have exceeded earnings estimates.

The bigger story might be analysts’ cuts to Q1 earnings estimates. Cuts in January & February averaged 5.7%, which is greater than the cuts averaged over the previous five years. This might come into play during the 2nd quarter as it appears the consumer is holding up well. According to the Atlanta Fed, consumer spending for Q1 has been revised higher to +2.5% from +1.2% in January. Last week, both Initial and Continuing Claims were lower than expected and lower than the previous week.


On the housing front, the 30-year rate has increased to 6.65% after dropping to 6.09% in early February, causing mortgage applications to drop, as well.

Existing Home Sales, a lagging indicator, seems to have flattened over the last 3 months, while New Home Sales and Pending Home Sales have picked up over the last few months. Pending Home Sales, a leading indicator, is at the highest level since August of last year. Consumers drive corporate earnings and make up two-thirds of GDP. There’s a distinct possibility earnings for Q1 could surprise to the upside, which would be good for equities. Until then, the market is absorbing Fed speak on a daily basis, which will keep trading choppy in the short-term.

 

Disclosures


The information contained herein is for informational purposes only and is developed from sources believed to be providing accurate information. The opinions expressed are those of the author, are for general information, and should not be considered a solicitation for the purchase or sale of any security. The decision to review or consider the purchase or sell of any security should not be undertaken without consideration of your personal financial information, investment objectives and risk tolerance with your financial professional.


Forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.


Any market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.


Past Performance does not guarantee future results.


Comments


bottom of page