Weekly Market Watch

Market Outlook

Given recent accelerations in inflation, many investors were relieved following last week’s Federal Open Market Committee (FOMC) meeting, in which the Federal Reserve (Fed) maintained its dovish tone. Economic data throughout the week came in below consensus expectations, including both the Institute for Supply Management^® (ISM^®) Manufacturing and Services indices, with the latter falling into contraction territory for the first time since December 2022. Likewise, Friday’s payroll report missed consensus estimates, helping quell fears of further monetary policy tightening measures by the Fed. As financial conditions eased, the S&P 500^® turned positive for the week, recovering to its 50-day moving average. Similarly, small- and mid-cap growth stocks performed well; the Russell 2000^® even outpaced the S&P 500 for the third consecutive week, the longest streak of the year. The U.S. Dollar Index had its second largest weekly decline of the year, which served as a boon for emerging markets. The MSCI China Index, for instance, is now the furthest above its 200-day moving average since August.

Chart of the Week

The blended earnings growth rate improved significantly last week due to contributions from all sectors except Energy.

The “Magnificent 7” (M7) earnings releases to date have propelled the growth rate to 5%. However, non-M7, consumer-related companies have noted an increasingly challenging market environment, particularly for lower-income consumers.

With first quarter earnings exceeding expectations, full-year 2024 growth estimates have been revised higher, and now sit at almost 11%.

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