May 3, 2023
Weekly Market Outlook
By Donn Goodman and Keith Schneider
There are a lot of data points grabbing the media headlines this week. However, there are several trends that are likely to persist and be important to the stock market’s direction immediately and after this week’s news.
The Fed’s commentary after its rate decision, Apple’s earnings, and the monthly employment report are all on deck for Wednesday through Friday respectively.
Any one of these three events could accelerate or derail the intermediate-term trend in stocks.
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Investors will be looking at how these events impact several important trends in the market such as…
1. The regional banking crisis continues to surprise and disappoint investors. The resolution of First Republic Bank’s crisis calmed markets on Monday, but it was followed by a wave of renewed widespread selling in the sector on Tuesday. This, illustrated in the chart of the KRE ETF below, suggests that this trend is far from over.
2. Narrowing market breadth is historically problematic for bull trends. This year, the five largest stocks are responsible for the majority of the S&P 500’s gains.
3. Earnings season is sending a message. The headlines have read that according to FactSet, 53% of S&P 500 companies have reported their Q1 2023 results with 79% beating their earnings estimates and 74% reporting revenues above estimates. However, this seemingly bullish statistic does not tell the whole story.
Click here for further analysis and details on these important trends and several more in this week’s Market Outlook.
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