In Markets "In a Nutshell"

Markets “In a Nutshell” for April 29, 2024

Investment Week at a Glance

Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.7%, the S&P 500 was up 2.70%, and the NASDAQ rose 4.20%. Foreign stocks (MSCI EAFE) were also up, rising 1.30%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.67%.  (Data source: Wall Street Journal)

Earnings Season in Full Swing

Last week 1/3 of the S&P 500 reported earnings for Q1 of 2024. So far, the reports have been encouraging as 80% of companies have been surprised to the upside. One of the key areas investors are paying attention to is the “Magnificent Seven” earnings as they are estimated the have an average increase in earnings of 47% from a year ago. So far those companies have delivered, with Google being the big winner and also announcing a dividend for the first time. Because valuations have risen so much in the past 5 months companies need to deliver on their earnings to support these higher valuations. If earnings continue to beat expectations, it will pave the way for markets to move higher in the following months.

First Quarter GDP Slows

First-quarter GDP came in at a 1.6% annualized pace, a significant slowdown from the 3.4% we saw in Q4 of 2023. A cooling in personal spending was to blame as well as a slowdown in spending on durable goods. The bulk of the GDP miss was from foreign trade and inventories which both tend to be volatile in the short term. Although this was a slowdown in GDP growth, it is nothing to worry about for now as it is still near the goal of GDP growth. This also shows the economy is gradually slowing, meaning that the Fed’s rate hikes are beginning to work their way through the economy. When the Fed begins to cut rates we could see GDP pick back up at an accelerated pace but until then it is expected to be in the 1.5%-2% growth range.

Quiz:

What is the expected year-over-year earnings growth of the S&P 500 in Q1 of 2024?  (Scroll Down for Answer)

  1.     2%
  2.     7%
  3.     11%
  4.     13%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer:

1.    2%.  Earnings growth is expected to be positive overall in Q1 but the Magnificent 7 has an expected earnings growth of 47% year-over-year.