Stock Market Today: April 29th - May 3rd, 2024

Welcome StonkForums to the trading week of April 29th!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:


Major Futures Markets End of Week:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:
(N/A.)

 

Micro Trumps Macro As Stocks Shrug Off Week Of Higher Inflation, Higher Rates, & Lower Growth
FRIDAY, APR 26, 2024 - 04:00 PM

It was an ugly macro week...



Source: Bloomberg

...and worse still, 'growth' surprises disappointed significantly while 'inflation' surprises surprised to the upside significantly...



Source: Bloomberg

Soaring inflation expectations sent rate-cut expectations to new cycle lows...



Source: Bloomberg

...pushing yields higher across the board (led by the long-end)...



Source: Bloomberg

But, stocks didn't care about any of that because a handful of mega-cap tech stocks' earnings were awesome (except META) - and that's what matters (for now)...



Source: Bloomberg

Nasdaq outperformed, up 4% on the week (its best week since the start of Nov 2023). The Dow was the laggard on the week but all the majors had a decent week...



Not the best week for some observers...

This week saw the biggest short-squeeze since the first week of March...



Source: Bloomberg

And the basket of Magnificent 7 stocks soared over 5% this week, its best week since the first week of November (Fed Pivot) - but it was noisy as TSLA surged, META tumbled, and then GOOGL/MSFT lifted the lid...



Source: Bloomberg

TSLA pushed back above $500BN market cap this week and Alphabet soared above $2TN market cap for the first time ever...



Source: Bloomberg

Tech and Discretionary outperformed on the week with Energy and Materials lagging (but all sectors ended the week green)...



Source: Bloomberg

5.00% remains the Maginot Line for the 2Y Yield...



Source: Bloomberg

Interestingly, the dollar ended the week practically unchanged - despite a lot of noise...



Source: Bloomberg

...despite the seventh straight week of declines in the yen vs the dollar as it appears the BoJ and MoF have given up...



Source: Bloomberg

Gold was dumped this week - its worst week since the start of December 2023. Spot prices did find support at $2300 though...



Source: Bloomberg

After two down weeks, oil prices rallied this week, with WTI back above $83...



Source: Bloomberg

Finally, intraday volatility has picked up dramatically in the last couple of weeks...



Source: Bloomberg

...as the distribution of possible rate outcomes has picked up significantly. Don't forget next week's QRA and FOMC as Yellen and Powell get 'back to work'.

 

The Headline GDP Number Masks a Strong Economy


The economy grew 1.6% in the first quarter, after adjusting for inflation. This was well below expectations for a 2.5% increase, and significantly below the 3.4% increase we saw in the last quarter of 2024. It also ended a streak of growth above 2% for six consecutive quarters. So, what happened – is growth really slowing down, and should we worry?

Simply put, no.

As with all macroeconomic data, you always want to look under the hood. Underneath the hood of GDP you find 5 major components:

• Household consumption
• Investment – both nonresidential and residential
• Government spending
• Change in private inventories
• Net exports (exports minus imports)

The last two, private inventories and net exports, tend to be the most volatile pieces of GDP growth. Excluding these gives us a much better picture of actual spending and production in the economy, i.e. final demand after adjusting for inflation. Think of it like “core GDP.” Real final demand rose at an annualized pace of 2.8% in Q1, well above the 2010-2019 average pace of 2.4%.



In fact, government spending eased in Q1 as federal nondefense spending fell, and state/local government investment pulled back. Excluding government spending from final demand, real private final demand rose 3.1% in the first quarter. That’s strong, no two ways about it. In fact, while last quarter’s GDP number is a lagging indicator, the most useful part of the report in terms of looking ahead is final demand. Right now, there’s not much sign that it’s slowing.

The table below shows a breakdown of GDP growth by the major groups I mentioned above. Some highlights:

• Consumption eased, but mostly because households purchased fewer vehicles and less gasoline (in real terms).
• Services spending accelerated at the fastest pace since the third quarter of 2021 (when it was fueled by the pandemic recovery).
• Investment spending picked up, with tech and industrial equipment spending accelerating.
• Residential investment (housing activity) added the most to GDP growth since Q4 2020.

You can see how the change in inventories and net exports were a big drag, pulling GDP growth lower by 1.21%-points when combined. Net exports were driven down by a surge in imports, as American households and businesses bought a lot more stuff from abroad than they did in the fourth quarter of 2023.



Here’s the Big Picture
As I pointed out above, economic growth remains strong when you consider the most important parts of the economy – household consumption, investment, and yes, even government spending. What’s amazing is that the economy has grown at a faster pace than the Congressional Budget Office (CBO) forecasted in January 2020. After adjusting for inflation, the economy is almost 1% larger than the CBO had projected. That’s despite 1) a worldwide pandemic, and 2) the most aggressive rate hike cycle by the Federal Reserve in 40+ years.



Of course, a strong economy means inflationary pressures are stronger, and we saw some evidence of that in the first quarter, which indicates that interest rates are likely to stay higher for longer, as I wrote in a blog last week. Stronger economic growth plus more inflationary pressures means the economy is growing quite rapidly in nominal terms (that is, before adjusting for inflation). That’s important because nominal GDP growth is ultimately where profits come from (the same blog linked above discusses how this happens). Nominal GDP growth rose at an annualized pace of 4.8% in the first quarter, much faster than the pre-pandemic trend of 4.0%. The underlying numbers point to a continuation of this above-trend pace. That’s positive for profit growth, which is ultimately what matters for markets over the long run.



Bears Come Out of Hibernation
Thu, Apr 25, 2024

The S&P 500 may have rebounded since this time last week, but sentiment has continued its slide. This week's AAII Sentiment Survey saw only 32.1% of respondents report as bullish, the lowest percentage since 11/2/23. In total, bullish sentiment has declined 17.9 percentage points since just four weeks ago when it hit 50%. That is the largest drop since December 2021 for any given four-week span.



Given the drop in bulls, bears have picked up to 34%. However, that reading was little changed week-over-week with a modest 0.1 percentage point increase. Like bulls, this is the highest bearish sentiment reading since last November.



Although the increase in bearish sentiment has been less pronounced, the inverse moves with bullish sentiment have been enough to push the bull-bear spread into negative territory for the first time since 11/3.



The 24 consecutive weeks with a positive bull-bear spread was one of the longest streaks in the survey's history and was tied with the 24-week streak that ended in July 2021 for the longest since 2015 (31 weeks). In all, there have only been 11 streaks that lasted at least 20 weeks in a row.



SPY Gaps Down by Weekday
Thu, Apr 25, 2024

US equity futures were already significantly lower on earnings weakness from Meta (META) prior to the 8:30 AM ET release of today's key economic indicators, but they took another leg lower after Q1 GDP came in much weaker than expected and PCE came in hotter than expected. Weaker economic growth and higher inflation are certainly not bullish for equities.

With about 15 minutes to go before the opening bell at 9:30 AM ET, the S&P 500 ETF (SPY) is trading down more than 1% in the pre-market.

Below is a look at all prior gaps down of 1%+ at the open for SPY since it began trading in 1993. This would be the 352nd opening gap down of 1%+ for SPY in the last 31 years, and on average, SPY has traded up 0.09% from the open to the close on these days with positive returns 51.4% of the time.

This would be the 68th time that SPY has opened down 1%+ on a Thursday, and on Thursdays specifically, SPY has averaged an open-to-close decline of 0.10% with positive returns 47.1% of the time.

As shown in the table, Friday gaps down of 1%+ have historically been followed by the biggest intraday bounce-backs (+0.39%), while Monday has been the worst weekday for bounce-backs with an average open to close decline of 0.20% after 1%+ gaps down.



This will be the 14th time that SPY has gapped down 1%+ during the current bull market that began in October 2022. On these days, SPY has averaged an open-to-close gain of 0.21% on days when it gaps down 1%+. (That makes sense, though, since it's a bull market.)

May Almanac: Historically Poor in Election Years

May has been a tricky month over the years, a well-deserved reputation following the May 6, 2010 “flash crash”. It used to be part of what we once called the “May/June disaster area.” From 1965 to 1984 the S&P 500 was down during May fifteen out of twenty times. Then from 1985 through 1997 May was the best month, gaining ground every single year (13 straight gains) on the S&P, up 3.3% on average with the DJIA falling once and NASDAQ suffering two losses.

In the years since 1997, May’s performance has remained erratic; DJIA up fourteen times in the past twenty-six years (four of the years had gains exceeding 4%). NASDAQ suffered five May losses in a row from 1998-2001, down –11.9% in 2000, followed by fourteen sizable gains of 2.5% or better and seven losses, the worst of which was 8.3% in 2010 followed by another substantial loss of 7.9% in 2019.


Since 1950, election-year Mays rank rather poorly, #9 DJIA and S&P 500, #8 NASDAQ and Russell 2000 and #7 Russell 1000. Average performance in election years has also been weak ranging from a 0.4% DJIA loss to a 0.6% gain by Russell 2000. Aside from DJIA, the frequency of gains in election year Mays is bullish, but down Mays have tended to be big losers. In 2012, DJIA, S&P 500, NASDAQ, Russell 1000 and 2000 all declined more than 6%.

Let’s Talk about Geopolitical Events


“There are decades where nothing happens; and there are weeks where decades happen.” Source Unknown

The escalating tension between Israel and Iran has many investors worried about what could happen next. Although we won’t pretend to know the answer, we do understand that while geopolitical events can cause near-term market volatility, they rarely cause major problems for markets longer term.

We don’t want to minimize the events overseas, but we hear this question frequently, so we reviewed 40 major historical geopolitical events to determine the market impact. On average, we found that stocks were higher three months later. While some of these events caused recessions and likely hurt overall returns, in many cases stocks did just fine. This was probably because a stronger economy was able to absorb the impact, even if the events were sometimes devastating from a human perspective.



Should the conflict between Iran and Israel continue to escalate, pulling in other countries, of course we would expect additional near-term volatility, especially given the sensitivity of inflation to oil prices. But, for now, it appears tensions have calmed in the region, and as long as the U.S. economy remains firm, which is likely, we expect the bull market to continue.

This Is Normal
The news headlines have been scary recently, but after the market run off the late-October lows, investors have been quite spoiled. From the Oct. 27 lows until the March 28 peak, the S&P 500 added 27.6%, marking one of the best five-month rallies in history. As we’ve noted previously, some weakness or choppy action after that kind of run is perfectly normal.

Most years tend to see more than three 5% corrections on average, and 2024 only just had its first. Even more interesting, many years have seen a 10% correction (we average about one a year), but have still managed to finish the year higher, with 2023 as the most recent example. Could the current 5.5% mild correction turn into a 10% correction? Anything is possible, but for now we do not expect markets to go that far.

We are actually encouraged by the fear starting to build up in the market. A month ago, nearly everyone was a bull, so these bouts of volatility are necessary to flush out the weak hands. Flows are moving out of equities, sentiment polls are turning dour, and overall anecdotal sentiment is much different than it was a few months ago. All in all, a choppy period and potentially a little more weakness could be in the cards, but we believe a tactical low is near.

Reviewing previous election years that started strong shows that choppy weakness could last until after Memorial Day, but a summer rally is also likely. So, don’t lose faith now. This is all part of the process, and we continue to expect a strong second half of the year.



Three Charts That Caught My Attention
Last week was the worst week of the year for stocks, but was it really that bad? I mean, technology and former highfliers were crushed, but regional banks had a great week.

Here are three charts that caught my attention recently. The first one shows that four sectors were green and eight sectors outperformed the S&P 500 last week. We’ve been in the camp all year that we liked cyclicals like industrials and financials, so to see this outperformance is a welcome sign and one we expect to continue.



Last Friday, for instance, saw more than 300 stocks in the S&P 500 finish higher, yet the index lost close to 1%. I looked back in history (using data back to 1998) and found only one other day that happened. Usually when a lot of stocks are up, the index is green. But we know why this happened—it was mainly due to tech falling, with NVIDIA down 10% on the day and other names down significantly as well. We’ve been market-weight tech all year and have anticipated a likely pause in the group and potential rotation into cyclicals, and that may be what’s taking place.

Second, I liked this chart from Frank Cappaleri, Founder of CappThesis, that showed the S&P 500 fell each day last week, but the equal-weighted S&P 500 (the bottom pane) was flat the last four days of the week. Again, under the surface, things weren’t as bad as it appeared and the potential for a tactical low grew.



The third chart I liked recently came from Scott Brown, Founder of Brown Technical Insights, and it showed last Tuesday was the peak in new monthly lows, even though we know prices continued to decline. This is what we call a positive divergence and shows that strength is building under the surface, increasing the odds of a rally.



The headlines aren’t good, but no market bottom in history has happened on good headlines, so this is a positive development. Are we at the lows yet? Maybe not, but for now we don’t expect the current 5% mild correction to turn into a 10% correction. Some more frustrating chop could be in play going forward, which would be perfectly normal.

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2024-



S&P sectors for the past week-

 

Here are the current major indices pullback/correction levels from 52WK highs as of week ending 4.26.24-


Here is also the pullback/correction levels from current prices


Here are the current major indices rally levels from 52WK lows as of week ending 4.26.24-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for April 26th, 2024
Video from AlphaTrends Brian Shannon


ShadowTrader Video Weekly 4/28/24
Video from ShadowTrader Peter Reznicek

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums May 2024 Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market direction vote and stock picks for May of this year 2024!

StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (4/29-5/3) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (4/29) <-- click there to cast your daily market direction vote for this coming Monday ahead!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 4.29.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 4.29.24 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 4.30.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Tuesday 4.30.24 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 5.1.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Wednesday 5.1.24 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 5.2.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Thursday 5.2.24 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 5.3.24 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

(T.B.A.)

Friday 5.3.24 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($AMZN $AMD $AAPL $SMCI $SOFI $PYPL $LLY $COIN $SQ $PFE $QCOM $SBUX $NVO $DKNG $ON $DVN $RIOT $DPZ $NET $PAYC $CVS $PINS $MMM $LNG $PARA $CVNA $MCD $KO $ACLS $RIG $GOLD $CNQ $FSLY $EPD $MA $MLCO $NXPI $PTON $HSY $ETSY $BILL $CDE $NOVA $MRNA $FTNT $NCLH $PHG $SIRI $WING $AMGN)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning April 29th, 2024 <-- click there to view!

 

Top of the morning StonkForumers! Happy Monday to all of you and welcome to the new trading week and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are under an hour from the US cash market open.

GLTA on this Monday, April the 29th, 2024!

 

Morning Lineup - 4/29/24 - Yo Yo Yen
Mon, Apr 29, 2024

It’s been a quiet start to the trading week as equity futures trade modestly higher and US Treasury yields are modestly lower. The only economic report on the calendar for the day is the Dallas Fed Manufacturing report which is expected to improve slightly from last month’s reading of -14.4. Just because the week is starting quietly, though, doesn’t mean it will stay that way. In terms of earnings, this week is the second busiest of the reporting period, and the economic calendar is also jam-packed with Consumer Confidence, both the ISM Manufacturing and Non-Manufacturing reports as well as the Employment report on Friday.

While Japanese equity markets were closed for Showa Day, the yen has seen some wild moves overnight. When FX markets opened for trading last night, the yen sold off hard and the USD/JPY cross quickly crossed above 160 for the first time since 1990. It didn’t stay at those levels for long, though, and buyers stepped in and the yen rallied. After briefly dropping below 155, the cross is currently trading right around 156. As shown in the chart below, after breaking above 152 just over a month ago, the yen has become unhinged.



It’s not often that the USD/JPY cross sells off more than 1% in a session and then reverses all those losses and more to finish the day with a rally of more than 1%. Since 1989, that’s only happened seven other times. In terms of where in the yen's cycle the seven prior reversals have occurred, there hasn’t been a clear pattern. The two in the late 1990s came during periods of yen strength (decline in the USDJPY cross), but the more recent occurrences were all clustered right around the end of a sharp rally in the cross (weaker yen).

 

Here is a final look at today's market and futures maps, as well as how each sector performed individually at the close on Monday, April 29th, 2024.

 

Top of the morning StonkForumers! Happy Tuesday to all of you and welcome to the final trading day of April and a frrrrrrrrrrrresh start. Here is a quick check on those futures as we are over an hour into the US cash market open.

GLTA on this Tuesday, April the 30th, 2024!

 

Morning Lineup - 4/30/24 - So Close
Tue, Apr 30, 2024

Futures were already lower ahead of the 8:30 release of the Employment Cost Index (ECI), and things have gotten worse since then as the report came in higher than expected (1.2% vs 1.0%). This year started with a high probability of multiple rate cuts as inflation was expected to decline. Now, the probability of even one rate cut has been marching toward zero as inflation remains stubbornly high. Still on the docket for today, we have the FHFA House Price Index at 9 Am followed by the Chicago PMI at 9:45 and Consumer Confidence at 10 AM. Outside of November 2023, which looks more and more like an aberration, the Chicago PMI has been below 50 since the fall of 2022, and with economists expecting a reading of 45.0 today, it's not expected to get back into growth mode anytime soon.

After an impressive rally last week, push is coming to shove as the major averages face their first major test of the bounce in the form of the 50-DMA. While the S&P 500 finished the day higher yesterday, it didn’t quite have enough momentum to close back above its 50-DMA even though it traded briefly above that level intraday.



The picture for the Nasdaq looks similar as it closed just shy of its 50-DMA as well.



One reason for the S&P 500 and the Nasdaq not reclaiming their 50-DMAs is the fact that Microsoft (MSFT), the largest company in both indices, traded down 1% and finished close to its lows for the day.



It wasn’t all bad news from a technical perspective yesterday, though. After coming up just shy of the 50-DMA on Friday, the Philadelphia Semiconductor Index (SOX) opened just below that level on Monday and managed to break through to the upside on an intraday basis and remain there through the close.



While MSFT has been having its troubles recently, shares of Apple (AAPL) have caught a break over the last six trading days, and the former largest company in the world has rallied over 5% taking it back above its 50-DMA for the first time since late January ending what was the longest streak of closes below the 50-DMA since late 2015.