Stocks inched higher on Monday, extending the strong performance from the previous week. Both the S&P 500 and the Dow Jones Industrial Average reached new record highs. The S&P 500 added 0.3%, while the Dow climbed 0.5%, or 195 points. The Nasdaq Composite also rose by 0.3%. However, the Dow’s gains were limited by the decline of cloud-based software company Salesforce, which fell 1% in value. Similarly, shares of Hershey dropped 1% following a downgrade from Morgan Stanley due to softer demand. On a positive note, Diamondback Energy experienced a significant increase of almost 10% after announcing the acquisition of oil and gas producer Endeavor Energy Partners. Additionally, Nvidia stock rose 2.2%, contributing to a 20% gain for the month and closing the gap between its market capitalization and that of Amazon’s. Fellow tech giant Meta Platforms also saw a gain of over 1%.
Last Friday, the S&P 500 made history by closing above 5,000 for the first time ever. Since the beginning of the year, the broader index has risen by more than 5%. All three major averages have experienced five consecutive weeks of gains, with the S&P 500 and Nasdaq Composite increasing by 1.4% and 2.3%, respectively, last week. The Dow, however, saw only a fractional increase. The performance of U.S. stocks has been remarkable, leading Mark Haefele, Chief Investment Officer of UBS Global Wealth Management, to express confidence in the current rally.
This week, investors are eagerly awaiting a series of key earnings reports and economic data. Sixty-one companies in the S&P 500 are scheduled to release earnings, including gig economy stocks like Lyft, Instacart, and DoorDash. Additionally, companies like AutoNation, Kraft Heinz, Hasbro, and Coca-Cola will offer insights into the state of the U.S. consumer. Regarding economic data, investors will closely watch the release of the Consumer Price Index (CPI) on Tuesday morning, which serves as a significant gauge of inflation. Furthermore, more economic indicators, such as retail sales, production, imports and exports, housing starts, and the Producer Price Index (PPI), will be published on Thursday and Friday. Jay Hatfield from Infrastructure Capital Advisors predicts that the CPI and PPI data will align with market expectations, supporting continued bullish sentiment. However, the market’s rally in recent months has been remarkably strong and consistent, raising concerns of a potential pullback.
Possible Slowdown in the Market
Although the stock market continues to push higher, there is growing speculation that the rally may soon lose steam. The S&P 500 has gone over 70 trading days without experiencing a 2% decline, an unusual streak according to Bespoke Investment Group. Traders and investors are cautious about a potential correction or slowdown in the market. As the release of inflation data looms, there is a sense of anticipation regarding its impact on the market’s future direction. Investors will closely analyze the data to determine whether the bull market can persist or if a pullback is imminent.
The stock market has remained resilient, recording modest gains and reaching new all-time highs. The ongoing rally has been supported by strong earnings reports, positive economic indicators, and market optimism. However, there are signs that caution is warranted, as the market’s exceptional performance over the past few months could lead to a slowdown or potential correction. Investors will keep a close eye on earnings releases, inflation data, and other economic indicators in the coming weeks to gauge the market’s trajectory.
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