Notes Along the Path: Market Update for Week 15

Gordon Achtermann |

Market Recap

Week 14: April 8 through April 12

The S&P 500 index fell 1.6% this week, its second consecutive weekly decline, as higher-than-expected consumer price data and cautious guidance from JPMorgan Chase (JPM) added to market jitters.

The market benchmark ended Friday's session at 5,123.41, its lowest closing level since mid-March. It's still in positive territory for 2024 with a year-to-date climb of 7.4%, but off to a rocky start for Q2 with a 2.5% drop so far in April.

The decline comes as investors are eager for signals about the Federal Reserve's next move. While hopes for rate cuts had fueled much of the stock market's gains in Q1, the March consumer price index on Wednesday came in higher than expected, prompting investors to curtail their prior optimism that rate cuts would start in June.

Investors are also keeping a close eye on Q1 corporate results as earnings season begins.

This is part of the ever-repeating cycle we are in. It is driven at least in part by the fact that most people, even seasoned investors, still confuse the economy and the stock market. Excess inflation is bad for all of us, particularly middle-class Americans. However, the fact that companies are able to raise prices indicates that people can afford to pay because the job market is strong. Today's price increases are NOT driven by supply shortages like they were in the Covid years. Corporate profits continue to go up, and in the long run that is always what determines stock prices.

JPMorgan on Friday reported better-than-expected Q1 earnings and revenue, but the bank raised its full-year expense outlook and maintained its 2024 net interest income outlook. Investors were disappointed by the lack of an increase in the net interest income guidance. JPMorgan's shares fell 6.5% on Friday, resulting in a weekly decline of 7.4%.

Every sector in the S&P 500 fell this week, led by financials, which shed 3.6%. Among the other hardest-hit sectors, materials, health care, and real estate each fell 3.1%. Technology had the smallest decline, down by 0.2%.

The financial sector's decliners included shares of Globe Life (GL), which tumbled 46% as the life and supplemental health insurance company refuted what it described as "unsubstantiated" claims in a report by short-seller Fuzzy Panda Research alleging its executives disregarded insurance fraud.

Also in the financial sector, shares of Morgan Stanley (MS) fell 6.8% amid a Wall Street Journal report that the US Securities & Exchange Commission, the Office of the Comptroller of the Currency, and other Treasury Department offices are investigating the bank over how it vets clients who are at risk of laundering money through its wealth-management division.

In the materials sector, shares of CF Industries Holdings (CF) shed 8.2% as BofA Securities downgraded its investment rating on the stock to neutral from buy. BofA Securities also lowered its price target on CF's stock to $88 each from $96.


Up Next

Next week, companies expected to release quarterly earnings include Goldman Sachs Group (GS), Charles Schwab (SCHW), UnitedHealth Group (UNH), Johnson & Johnson (JNJ), Bank of America (BAC), Morgan Stanley, Abbott Laboratories (ABT), CSX Corp. (CSX), Netflix (NFLX), Procter & Gamble (PG) and American Express (AXP).

Economic data due next week include US retail saleshousing starts, building permits, and existing home sales for March, among other reports.


Stay the course!


All the Best!

Gordon Achtermann, CFP®