Morning Market Preview for September 24th, 2024

Here's the overview:

Economic Growth and Inflation

• GDP Growth: The U.S. economy experienced a notable slowdown, with GDP growth coming in at 1.6%, significantly lower than the previous quarter's 3.4%. This deceleration was attributed to various factors including a drop in federal spending, a widening trade deficit, and inventory liquidation. Despite this, there was an underlying resilience in private domestic purchases, suggesting not all was gloomy.
• Inflation: Inflation remained a hot topic, with the Core PCE Price Index, which the Federal Reserve watches closely, showing a year-over-year increase of 3.6%, slightly below some expectations but still signaling persistent inflationary pressures. This figure, along with other inflation metrics like the GDP Price Index rising by 3.1%, indicated that while inflation might be cooling, it was still above comfort levels for many policymakers.

Market Performance

• Stocks: The stock market, particularly the S&P 500, set 22 new highs in Q1, showcasing strong investor confidence in the U.S. economy's ability to achieve a soft landing. This optimism was broad-based but led by technology sectors, which continued to benefit from AI-related advancements. Financials also performed well, reflecting confidence in the banking sector despite rising delinquencies in lower-income segments.
• Bonds: The bond market saw yields on 10-year U.S. Treasuries rise to 4.20% by the end of March, indicating expectations of sustained or slightly higher inflation and economic growth. This movement in yields was partly due to the anticipation of the Federal Reserve's policy decisions, which were closely watched for signs of rate cuts.
• Currency and Commodities: The U.S. dollar strengthened against major currencies like the euro and yen, reflecting the relative strength of the U.S. economy. Oil prices also surged by over 16%, driven by OPEC+ production cuts and renewed optimism in global growth prospects, despite geopolitical tensions.

Federal Reserve's Stance

The Federal Reserve's communication throughout Q1 was pivotal. While there was a strong signal towards a potential rate cut in June, the actual decision was delayed, influenced by the economic data which showed a robust economy but with inflation not declining as rapidly as hoped. This led to a mixed market reaction, with initial disappointment followed by a recalibration of expectations towards later rate cuts.

Global Market Sentiment

Internationally, while U.S. markets showed momentum, European and Asian markets also performed well, sometimes outperforming the U.S. on a currency-adjusted basis. This global market performance suggested a broadening of economic recovery or at least stabilization beyond just the U.S., influenced by similar monetary policy shifts in other major economies like the ECB hinting at rate cuts.

Looking Forward

As Q1 closed, the market's forward-looking indicators like the P/E ratio for the S&P 500 increased, signaling high valuations driven by expectations of future earnings growth or lower interest rates. However, this also hinted at potential overvaluation risks if earnings growth didn't materialize as expected.

Conclusion

The first quarter of 2024 was marked by a complex interplay of economic growth, inflation, and market expectations. While the economy showed signs of slowing down from its previous pace, the underlying consumer and business spending remained resilient. Markets, buoyed by tech and financial sectors, continued their upward trajectory, though with increasing attention to when and how monetary policy would adjust. Inflation, though showing signs of cooling, remained a central concern, influencing both market movements and Federal Reserve actions. This quarter set the stage for what could be a pivotal year, where economic policies, global growth, and technological advancements would continue to shape market dynamics.

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Good morning, Heroes!

Here’s your Morning Market Preview for September 5, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!

Key Economic Reports:

• ADP Employment Report at 8:15 AM ET will offer insights into private sector job growth, setting the stage for Friday's Non-Farm Payrolls.
• Initial Jobless Claims at 8:30 AM ET, alongside Productivity and Costs, will provide a snapshot of the labor market's health.
• S&P Global Services PMI at 9:45 AM ET and ISM Services PMI at 10:00 AM ET will gauge service sector activity, crucial for economic recovery insights.

5 Key Earnings Reports Today:

• Broadcom (AVGO):
  • Importance: Reflects semiconductor demand, particularly for AI and data centers.
  • Expectations: Analysts predict a 46% year-over-year revenue increase but a decline in net income.
• NIO (NIO):
  • Importance: Key for EV market trends, especially in China.
  • Expectations: Strong financial results with record deliveries expected.
• FuelCell Energy (FCEL):
  • Importance: Insights into clean energy tech, impacting future energy solutions.
  • Expectations: Focus on operational efficiency and new project announcements.
• Samsara (IOT):
  • Importance: Indicates IoT adoption across industries.
  • Expectations: Growth in subscription services and customer base expansion.
• Smartsheet (SMAR):
  • Importance: Reflects demand for collaborative work management software.
  • Expectations: Continued revenue growth, insights into AI tool adoption.

The Fed:

• No direct actions today, but market participants will dissect economic data for hints on future rate decisions. The next FOMC meeting is scheduled for September 17-18.

Stocks:

• Markets are cautiously optimistic after recent volatility, with tech stocks in focus due to earnings.

Bonds:

• 2-Year Treasury Yield Opened at: 3.75%
• 10-Year Treasury Yield Opened at: 3.755%
• Bond yields are closely watched as economic data could sway inflation expectations and Fed policy predictions.

Crypto:

• Bitcoin (BTC): in the $57,000 - $58,000 range, up 34.76% this year.
• Ethereum (ETH): in the $2,300 - $2,400 range, down from its 50 day moving average of $2972, up 4.46% this year.
• Top gainers last week included smaller cap altcoins like Solana and Cardano, showing a rotation towards high-risk, high-reward assets.

Gold:

• Opened at: $2,495 per ounce, up 22.08% this year.
• Gold prices rose, often seen as a safe-haven investment during times of economic uncertainty or when inflation fears rise.

Real Estate:

• The current 30-Year Fixed Mortgage Rate: 6.38%, down 4.35% this year.
• While not directly reported today, real estate markets are influenced by interest rates, which are closely tied to the Fed's actions and economic indicators like employment.

Geopolitical Aspects:

• No major geopolitical events directly affecting markets today, but ongoing global tensions could always influence investor sentiment.

Worldwide Market News:

• APAC markets showed mixed results, with a cautious approach ahead of U.S. economic data, indicating a globally interconnected market sentiment.

And that’s your Morning Market Preview for the day. As always, we wish you a happy, healthy, and fruitful day!

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

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    We’re the Guide.

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Good morning, Heroes!

Here’s your Morning Market Preview for September 20th, 2024
Read, or listen relaxingly for a few minutes – whichever you prefer!

Key Economic Reports

• None scheduled for Friday.

Key  Earnings Reports & Events Today

• No earnings reports scheduled for Friday either.
  
  
• Boeing’s strike continues, and the company has furloughed thousands of workers. The strike began after union members overwhelmingly rejected a proposed contract, leading to a work stoppage that is now becoming prolonged. The strike began on September 13th.

The Fed

• After the recent 50 basis points cut to 4.75-5.00%, the next meeting's outcomes will hinge on new data, potentially setting further rate adjustments.

Stocks

Year-to-Date Performance:

• Up Most: Tech was up 3.08% yesterday, now up 24.26% this year. Utilities is second-best on the year, up 23.03%.
  
  
• Down Most: Important to know, no sectors are negative on the year. The smallest gain has been in Energy, up 4.77% this year. Second-to-last is Materials, up 8.68%.

5 Day Moving Average: 

• Up Most: 95% of Energy Large Cap stocks are now above their 5 day average. Tech is second now with 88% of its Large Caps above their 5 day average.
  
  

• Down Most: Utilities are down, and only 16% of Large Caps are above their 5 day average. Next closest is Real Estate and Consumer Staples at 29%. 

Crypto

• Bitcoin: Up big recently, now about $62,992, which puts it at a staggering 49.89% gain on the year.
  
  
• Ethereum: It’s been a good couple of days for Ethereum again, and is up to about $2,465, which means a 7% gain on the year.
  
  
• Top Gainers Recently: Solana is up big again, about 9.82% in the last day. Ox and Bitcoin Cash are close on Solana’s heels though, both up about 9.25%.
  
  
• Important to note: Crypto markets are always open and prices change constantly.

Bonds

• 2-Year Treasury:  Yields continue to come down, now at 3.629%.
  
  
• 10-Year Treasury: Up a tick to 3.715%, but overall it’s had a decline this year too.
  
  
• The yield curve is no longer inverted, having un-inverted in late August, 2024.

Gold

• Price: Gold is flat in the last day, now about $2,587 per ounce, and up 25.4% on the year.

Real Estate

• 30-Year Fixed Mortgage Rate: Up just a bit, now to 6.17%. The mortgage rate has dropped about 7.5% this year.

Geopolitical Aspects

• Global markets are watching closely for economic data from China, which continues to show slower-than-expected growth.
  
  
• Meanwhile, European markets are grappling with high energy prices as winter approaches, which could lead to higher costs and increased inflation risks across the continent.
  
  
• Concerns include Middle East tensions affecting oil prices and global investment flows.

‍

Built for The One in the Arena

Arena Investor is on a mission not only to help with financial planning, and investment management, but also with education. Keep reading, watching, following, and sharing great Arena Investor content. And as always if you want professional advice, we are glad to be your teammate – along a financial journey you can actually enjoy.

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    We’re the Guide.

P.S.

Continue reading, if you would enjoy…

Some Simple Explanations of Key Concepts to Level Up Your Financial Education

Each of these elements interacts, creating the dynamic we call 'the market'.

Understanding these aspects of the investing arena can help investors in making informed investment decisions.

You’re the Hero.
    We’re the Guide.

• Economic Reports: Data like jobless claims help predict economic health. For instance, rising claims might suggest economic slowdown.
• Jobless Claims: These are weekly reports that show the number of people filing for unemployment benefits. Higher numbers can indicate a weakening labor market.
• Housing Starts: This measures the number of new residential construction projects and is a key indicator of real estate market health.
• The University of Michigan's Consumer Sentiment Index measures consumer confidence through surveys, reflecting optimism or pessimism about personal finances and business conditions.
• Federal Reserve Rate Decisions: The Fed adjusts interest rates to either stimulate the economy (by lowering rates) or control inflation (by raising rates). Rate cuts can make borrowing cheaper, while rate hikes aim to curb inflation.
• Treasury Yields: The return on U.S. government bonds, often used as a measure of investor sentiment about future inflation and economic growth.
• Stock Sectors: Different sectors thrive in different economic conditions. Tech might boom during innovation, while energy could struggle with green shifts.
• Bonds and Yields: Bonds are safer than stocks but yield reflects risk or inflation expectations. Higher yields could mean investors demand more return.
• Cryptocurrency: Digital currencies like Bitcoin and Ethereum have been volatile but offer significant returns in 2024.
• Gold: A traditional safe-haven investment that often rises during times of uncertainty or when inflation is high.
• Real Estate: Influenced by rates, economic health, and demographic trends. Lower rates can inflate home prices due to increased buying power.
• Mortgage Rates: Higher rates make borrowing more expensive, which can cool down housing demand and affect real estate prices.
• 1 Basis Point (BPS) equals 0.01%. It’s easier to say “5 bips” than it is to say “zero point zero five percent.”