Economics Market Recap Market Update Stock Market

Stock Market Recap & Outlook (4/7/23) – A Slow Start to Q2

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Dividend Dollars’ Outlook & Opinion

Be careful what you wish for was the theme of this week. The Fed has been telling us for months that labor market deterioration would be needed in order to slow inflation. This is a risky ask as consumer spending accounts for about 2/3s of the US economy, job losses significant enough to dent inflation are likely to lead to a recession.

This week was about as choppy and directionless as we can get. This action tells me that the market is at an inflection point, one where we must decide if bad news is good news (because it might mean the end of the rate hike) or if bad news is bad news (because it might mean a recission is unavoidable0. It may be a while before we have the answer to that question.

Last week, our indicators and thoughts pointed to moderate bullishness with high volatility. At the close of Thursday, the $VIX was $0.42 lower for the week at $18.40. Volatility ended lower, but it was not without it spikes close to $20.00 four times throughout the week. SPX ended slightly lower for the week at 4,105 compared the close last week at 4,109. I’d say the jury is out on whether the forecast was on target or not (I’m thinking not)!

Technically, because of the lack of moves, things haven’t changed much for SPX. It is still about the long term downtrend and all of the significant SMAs. We did break above and then back under the significant 4,100 level.

Remember last week when I said, “Historically, markets tend to switch directions at the beginning of a new quarter and April tends to be a relatively bullish month”? Well the first half of that was true! This week was a definitely a switch away from the strong upward direction we had to end March.

Various indicators have worsened through the course of this week. SPX open interest put call ratios and the volume put call ratio of the major indexes worsened to moderately bearish levels. SPX volume put call ratio worsened to neutral levels from moderately bullish last week. Meanwhile, VIX open interest changed to moderately bullish. Overall, there was not much shifting in the indicators, but they’re just enough to lean a bit more bearish next week compared to this week.

Additionally, the reaction to the march employment report will be felt on Monday, the CPI and PPI follow midweek, and the unofficial start of Q1 earnings season from several banks is certain to bring volatility next week.

Next week appears to be learning bearish via the indicators and technical resistance around the 4,100. Positive data and earnings reports may flip that script.

Weekly Market Review


The stock market ended the week slightly down. The Dow Jones Industrial Average squeezed out a slim gain, thanks to money flowing into blue chips, while the major indices made losses due to renewed growth concerns.

There was not a ton of conviction to start the week after OPEC+ surprised markets with a 1.16 million barrels per day production cut announcement. This sent oil prices on a tear, rising 6.4% this week to $80.70/bbl.

Then, growth concerns carried the price action for the remainder of the week. Lingering slowdown concerns were stoked by a slate of weak economic data and a contention by JPMorgan Chase ($JPM) CEO Jamie Dimon in his annual shareholder letter that the regional banking crisis is not over yet and have unseen repercussions for a time.

Many of the economic releases this week came in weaker than expected, adding to the uncertainty surrounding this week.

With an increasing concern of slower growth, investors anticpate further cuts to earnings estimates. Cyclical sectors were the biggest losers this week while defensive-oriented sectors enjoyed nice gains.

The industrials, consumer discretionary , and materials  sectors were the top losers while the utilities  and health care  sectors rose to the top of the leaderboard. The energy sector was another top performer this week despite its economically-sensitive status thanks to the OPEC+ announcement.


The stock market kicked off this holiday-shortened week with mixed price action. There was not a lot of conviction in the market except for oil-related trades following the OPEX+ announcement.

The main indices traded in narrow ranges Monday, with the Dow Jones Industrial Average leading throughout the session. The S&P 500 climbed to 4,127 in early action but gave back those gains and then some as it slid to 4,098 before staging an afternoon push that left it close to its high for the day at the close. Nasdaq slumped throughout the day but ended above its lows as mega cap stocks pared larger losses in the late afternoon run.

Tesla ($TSLA) was a notable laggard from the mega cap space, falling more than 6.0% on Monday after reporting Q1 production and delivery numbers.

Economic data for Monday had the Manufacturing PMI, ISM manufacturing index reading, and Construction Spending update.

The March IHS Markit Manufacturing PMI fell to 49.2 from 49.3.

The March ISM Manufacturing Index fell to 46.3% ( consensus 47.5%) from 47.7% in February, the consensus was 47.5%. This is the lowest reading since May 2020. The line between expansion and contraction is 50.0%, so the sub-50.0% reading for March reflects a general contraction in manufacturing activity for the 5th straight month. The ISM says this level corresponds to a change of -0.9% in real GDP on an annualized basis based on the past relationship of the PMI and the overall economy.

Total construction spending declined 0.1% MoM in February, compared to flat expectations. Total private construction was flat MoM while total public construction fell 0.2% MoM. On a YoY basis, total construction spending was up 5.2%. New single-family construction remained a weak spot, as higher interest rates and increased building costs make financing expensive at a time when concerns about a future economic slowdown/contraction are taking root.


The Dow Jones Industrial Average, Nasdaq Composite, and S&P 500 hit modest losses on Tuesday as the resistance to Monday’s selling efforts dissipated. Initially, the main indices all moved higher, but gains quickly faded and the market traded near its worst levels for most of the session. The S&P 500 was able to close right on top of the 4,100 level thanks to a last minute move higher.

Banks stocks came under some added selling pressure, undercut by economic slowdown concerns that followed the day’s weaker than expected economic data and a stark warning by JPMorgan Chase (JPM) CEO Jamie Dimon’s annual letter.

In addition to the financial sector, other cyclical sectors felt the pinch of slowdown concerns and underperformed Tuesday, while defensive areas received modest gains.

Still, the S&P 500 held up okay Tuesday despite being overbought on a short-term basis following big gains in Q1. Losses would have been more pronounced if not for gains in a few heavily-weighted stocks.

Additionally, Finland has joined NATO as the 31st member through a swift addition that began in response to Russia’s invasion of Ukraine. “What we see is that President Putin went to war against Ukraine with a declared aim to get less NATO,” Jens Stoltenberg, NATO Chief, told reporters. “He’s getting the exact opposite.” Following the announcement, Russia claims it will bolster their border defenses.

As for economic data, we received the Factory orders report and the JOLTS job openings report.

Factory orders fell 0.7% MoM in February, compared to an expected 0.5% fall. This follows a downwardly revised 2.1% decline in January. Shipments of manufactured goods fell 0.5% MoM after increasing 0.3% in January. This report is backward looking, yet it fits the understanding that manufacturing conditions have weakened, evidenced by the more current March ISM Manufacturing Index which was lackluster on Monday.

The JOLTS report showed that job openings totaled 9.931 million in February following a downwardly revised count of 10.563 million in January.This was the first reading below 10 million since May 2021.


The stock market had a weak showing Wednesday. Blue chip names continued to get bought while more economically-sensitive sectors logged decent losses following another batch of weak economic data Wednesday morning.

the ADP Employment Change for March was weaker than expected, the February trade deficit widened more than, and the March ISM Non-Manufacturing Index was weaker than expected.

Buying interest for Treasuries picked up following the data releases. Stocks didn’t respond positively to the drop in market rates due to a sense that a weaker economy will translate into further cuts to earnings estimates.

The main indices spent most of the morning in a slow grind lower, but climbed above their worst levels of the day by close. Nasdaq fared the worse while the Dow Jones Industrial Average squeezed out a slim gain, benefitting from blue chip favoritism, with big wins by $UNH and $JNJ for the day.

Shares of Johnson & Johnson moved on news that its subsidiary LTL Management re-filed for voluntary Chapter 11 bankruptcy protection to resolve claims from cosmetic talc litigation and will pay an $8.9 billion settlement, while UnitedHealth surged on an upgrade to Strong Buy from Raymond James.

Data for Wednesday included the ADP employment report, the February Trade Balance Report, the IHS Services PMI, and the ISM non-manufacturing index.

The ADP Employment Change Report for March showed private sector employment increasing by 145,000 compared to a 205,000 expectation. Interestingly, Services Hiring surrounding financial activities and business services fell the most this reading. Weak pockets included manufacturing (-30,000), financial activities (-51,000), professional/business services (-46,000), and information (-7,000).

The February Trade Balance Report showed a growing trade deficit to $70.5 billion from a downwardly revised $68.7 billion in January. Exports were $6.9 billion less than January exports and imports were $5.0 billion less than January imports. The decline in both exports and imports is reflective of a slowdown in global trade activity.

The March IHS Markit Services PMI fell to 52.6 in the final reading from 53.8. The ISM Non-Manufacturing Index for March dropped to 51.2% from 55.1% in February. Again, line between expansion and contraction is 50.0%, so the March reading reflects continued growth in the services sector, but at a slower pace than the prior month. Activity in our economy’s largest sector is slowing noticeably with a cooling off in the new orders growth rate. The slowdown in activity and improved supply chain dynamics, though, have helped temper the pace of price increases for services.


The last day of this holiday-shortened week started on a softer note as investors digested another weak economic release. Things improved considerably around mid-morning thanks to some mega cap stocks staging a strong recovery from their lows.

The main indices all closed near their best levels on Thursday, but on below-average volume. Despite Thursday’s gains, growth concerns that drove price action in recent sessions did not fade as seen by the underperformance of economically-sensitive sectors.

The energy (-1.5%), materials (-0.2%), and industrials (-0.03%) sectors were the lone laggards to close in the red. On the flip side, the communication services (+1.7%) and information technology (+0.7%) sectors were among the best performers, thanks to gains in their respective mega caps. Other notable outperformers were the utilities (+0.7%) and real estate (+0.7%) sectors.

Economic data for the day was primarily the weekly initial claims reading.

Claims came in at 228K and the last reading was revised to 246K from 198K. Weekly Continuing Claims also saw a slight increase to 1.823 million from the upwardly revised 1.817 million in the last reading. The report featured a revision to the seasonal adjustment factor, which resulted in big upward moves to figures from recent weeks. This is a big miss as far as these reports are concerned. That said, the higher level of claims will invite some questions about the strength of the labor market after last week’s release of the Job Openings and Labor Turnover survey for February showed a big drop in openings.


Happy Good Friday yall! Enjoy your weekend and happy holidays!

That’s it for my recap! If you would like to see how I am building my dividend portfolio using my predictions/strategy written here, you can read about my buys in my weekly portfolio update on this link.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.


Dividend Dollars

Earnings Economics Market Recap Stock Market

Stock Market Week in Review (12/9/22) – This Week’s PMI and Next Week’s CPI

This weekly market recap is brought to you by Koyfin, a powerful analytical tool that I am proud to partner with. Their platform is entirely customizable for whatever data you want to look at including stocks, ETFs, mutual funds, currencies, economic data releases (one of my personal favorites used often for these posts), crypto, and even transcripts of company events! Click the link above to get a special offer only for Dividend Dollar readers or go give my product review a read if you’re interested!

Weekly Review

It was a trend-down week for the stock market after the quick run we experienced in the end of last week. At the start of the week, the S&P 500 was up over 10% for the quarter, the Dow Jones Industrial average was up over 18%, the NASDAQ composite was up over 6%, and the Russel 2000 was up over 11%

These gains have primarily been predicated on the notion that the Fed may soften its approach, a view that was presumably aided by Fed Chair Powell’s speech last week at the Brookings Institute.

This optimism was cooled this week as concerns resurfaced that the Fed might overtighten and trigger a period of much weaker growth or even recession. The main sticking point for the stock market is that a weaker growth outlook does not bode well for 2023 earnings.

A stronger-than-expected ISM Non-Manufacturing Index for November (56.5% vs 54.4% prior and a 53.3% expectation) also supported the idea that the Fed may rise rates higher and hold them there for longer.

Going into the historically strong “Santa Rally” month, this week was a disappointing start. The S&P 500 had the worst start to a month (five consecutive losses) since 2011.

Concerns that the Fed is going to trigger a deeper economic setback have been evident in the Treasury market for some time now. An inversion of the yield curve, which deepened this week, has often been a leading indicator of a recession. The 2s10s spread is now the widest it has been since the early 1980s. The 2-yr note yield rose to 4.37% and the 10-yr note yield rose to 3.63%.

Those growth concerns started to register more noticeably for the stock market this week. All 11 S&P 500 sectors lost ground, but the slimmest losses were registered by the counter-cyclical utilities, health care, and consumer staples sectors. The sharpest losses were logged by the energy, communication services, and consumer discretionary sectors.

Collapsing oil prices were another manifestation of the market’s growth concerns. WTI crude oil futures fell 10.8% this week to $71.29/bbl despite reports that China is easing up on zero-COVID related policies.

There was some economic data that reflected a welcome moderation in wage-based inflation. The revised Q3 Productivity Report showed a softer 2.4% increase in unit labor costs than the preliminary estimate of 3.5%. Stocks did not rally on the data, though.

The role of wage based inflation in the Fed’s policy decisions was highlighted this week by an article in The Wall Street Journal from Nick Timiraos, who some believe is the Fed’s preferred journalist for providing breaking information. Mr. Timiraos suggested that wage inflation could ultimately compel the Fed in 2023 to take its benchmark rate higher than the 5.00% the market currently expects.

In other news this week, the FTC is seeking to block Microsoft’s ($MSFT) acquisition of Activision Blizzard ($ATVI).

Looking ahead to next week, the market will be focused on the November Consumer Price Index (CPI) on Tuesday after the Producer Price Index (PPI) for November came in high this Friday. Then the FOMC decision and release of updated economic projections follows on Wednesday and could very well provide a volatile market for the week.

Dividend Dollars’ Opinion

That’s it for the recap. Now for my opinion!

Last week we had a clean rejection off of the major trendline on Monday, fell to the 100-day simple moving average on Tuesday, bounced a bit on Thursday, and fell back down to the 100 SMA on Friday.

This 100-day SMA has been triple-confirmed as support (small white arrows below) and will now be tested again this next week. Resistance at the 200-day SMA proved to work again this week. SPX ran into resistance at the 200-day SMA in August and couldn’t hold over it Monday morning.

Right now, the market is in a little bit of straddle under the 200SMA and the 100SMA. Break over the 200SMA and bulls could have a hayday until the meet the trendline again for the next task. Break under the 100SMA and bears could see a quick drop to 3,815 area as a gap fill.

Last week did not show much strength for buyers, so I think breaking down or hugging onto the 100SMA is a more likely path.

Economic events next week could bring huge momentum into the market in either direction depending on how they play out.

On Monday we have the treasury budget which shouldn’t be too significant. If anything, Monday price action will be fairly uneventful as the market awaits the CPI reading on Tuesday. If the CPI comes in higher than expected, the market could drop fast. If CPI comes in better than expected, investors will still wait for the FOMC rate decision on Wednesday to truly bring in heavy buying power.

Wednesday will be the key to next week. As we get closer to the Fed Funds target rate with each rate hike, the subsequent rate hikes become more and more important as clues to tell us if the Fed over or undershot. The market expects a 50-bps hike on Wednesday, if we see higher or low expect volatility.

Then, Thursday will bring us retail data which will give input on the state of the consumer. All of these big items together will make next week one to remember (and be cautious of).

Add to that, next week is also the last week of earnings season with a couple of big tech names ($ADBE and $ORCL) reporting. Q3 earnings, from the 497 S&P 500 companies that have reported so far, have a 59% beat of the top line and 69% beat of the bottom line. This was 63% and 76% last quarter, respectively.

Big misses by the earnings next week could enhance any downward moves that are predicated by the economic events. Any surprises won’t carry much weight into what appears to be a very bearish week next week.

What’s more important is drop in earnings beats from last quarter. This is a clear sign that the Fed driven growth slow down is occurring. Expect more lack luster earnings seasons, and to greater degrees, while we stay in this high-rate environment.

Overall, next week’s performance lies greatly with the CPI and Fed rate change. Those things are tough to predict, therefore, outside of those events and looking only at technicals, I think next week is a red one. But only time will tell! Be ready either way!

I was ready for the move down last week and made some favorable adds to my portfolio. You can read about these moves in my weekly portfolio update here.

And if you like updates like this, follow my Twitter or my CommonStock page where I post updates on the economic data throughout the week.


Dividend Dollars