Everything to Know about Macro and Markets
Markets celebrated another record close on Friday, as the relentless market rally propelled the S&P 500 (SPX) index above the 5,000 level for the first time. The benchmark index has risen in 14 out of the last 15 weeks, its best run since 1972. Over the last five trading days, the SPX clocked in a gain of 1.5%.
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The weekly rally was driven by technology stocks, with Big Tech leading the charge. The broad tech benchmark Nasdaq Composite (NDAQ) surged 2.6% over the week, and during Friday’s trading it reached an important milestone of 16,000 for the first time since 2021. The tech megacap index Nasdaq-100 (NDX) gained 2%, closing at its 11th straight record high since the start of the year.
The Dow Jones Industrial Average (DJIA) eked out a weekly gain of less than 0.5% after Friday’s decline, which strongly contrasted with the direction of the other benchmarks. The blue-chip index was pressured by Walt Disney (DIS), which gave back some of its earlier gains achieved on the back of the earnings beat.
Positive Earnings Surprises
Stock gains were fueled by continued optimism regarding the economy, which received another validation as December’s headline inflation data was revised lower. In addition, most tech megacaps produced blockbuster earnings reports and positive guidance. Meta Platforms (META), Amazon (AMZN), Microsoft (MSFT), and Nvidia (NVDA) have continued to surge, with their gains contributing roughly 70% of the S&P 500’s returns this year.
Notably, this earnings season is turning out to be much better than expected for most of the SPX components. According to FactSet data, out of the 67% of the firms that have already reported, 75% have surpassed analysts’ EPS estimates. Analysts have responded by lifting their estimates for the fourth quarter’s earnings growth, which is now expected to reach 6.5% year-over-year.
Crucial Data Expected
This week will be heavy on crucial economic data, including January’s inflation numbers. The markets will focus on these reports, hoping to receive confirmation that the Federal Reserve will begin to cut rates in the near future, lifting corporate profit outlook and helping stocks to maintain momentum. While the SPX’s crossing the 5,000 line injects a fresh dose of optimism into the markets, pulling the money from the sidelines, concerns over stretched valuations keep mounting. With the stocks trading in overbought territory, economic reports have the potential to wield a “make or break” power over risk sentiment going forward.
Upcoming Earnings and Dividend Announcements
The Q4 2023 earnings season is in full swing, with several important earnings releases scheduled for this week.
The most notable earnings reports this week will be published by Arista Networks (ANET), Airbnb (ABNB), Coca-Cola (KO), Cisco Systems (CSCO), Occidental Petroleum (OXY), Coinbase Global (COIN), DraftKings (DKNG), Applied Materials (AMAT), Deere (DE), and Akamai Technologies (AKAM).
This week, Ex-Dividend dates are coming for Exxon Mobil (XOM), Microsoft (MSFT), Eli Lilly & Co (LLY), Kroger Company (KR), Chevron (CVX), Shell (SHEL), Amgen (AMGN), Johnson & Johnson (JNJ), United Parcel Service (UPS), The Hershey Company (HSY), and other dividend-paying firms.
