After breaking to all-time highs, stocks edged slightly higher to start the new trading week. This bullish sentiment is fueled by robust economic indicators, despite concerns that the market's rapid ascent might have run too far, too fast.
This Week on Wall Street - Week of January 22nd
After breaking to all-time highs, stocks edged slightly higher to start the new trading week. This bullish sentiment is fueled by robust economic indicators, despite concerns that the market's rapid ascent might have run too far, too fast. Investors are now increasingly optimistic about a 'soft landing' scenario, where the economy not only remains resilient but also sees inflation gradually aligning with the Federal Reserve's 2% target. In the realm of fixed income, there's a noticeable uptick in yields, with figures climbing from 3.9% to 4.1% since the year's start. The week ahead is packed with treasury auctions, which are likely to be a critical focus for traders. These auctions are expected to significantly influence yield repricing.
Internally, the divergence noted last week between breadth and the overall index level is starting to close in favor of the bulls. Newton scores are showing increased improvement in Large Caps compared to their smaller cap counterparts after the shift began last week. On the fixed income side, we are still seeing more strength out of the short end of the curve as the 10-year Treasury has climbed. Beneath the surface, Technology is on top for the first time this year followed closely by Communications. Utilities and Energy are the laggards.
In economic news, we get a key read on economic growth with the Q4 2023 GDP preliminary report. Estimates are for a 1.7% increase compared to the previous 4.9% boost. Additionally, we will get a read on the Fed's preferred measure of inflation; the PCE index. Estimates are for a 3% YoY increase for core compared to the previous 3.2% read.
Stories to Start the Week
Florida Gov. Ron DeSantis suspended his Republican presidential campaign yesterday while endorsing his rival Donald Trump.
Tara VanDerveer, Stanford's women's coach, has set an all-time record for most coaching wins in the history of college basketball.
The "Mean Girls" musical raked in $33 million over its opening weekend.
Shares of Gilead fell after a key drug from the company failed to improve survival in a late-stage trial on patients with advanced lung cancer.
Shares of Archer-Daniels-Midland slid over 20% after their CFO was placed on administrative leave as the company investigates accounting practices at its Nutrition segment.
Economic Releases This Week
Monday: US Leading Economic Indicators
Wednesday: S&P Flash US Services & Manufacturing PMI
Thursday: Q4 GDP, Initial Jobless Claims, New Home Sales
Friday: Personal Income & Spending, PCE Index, Pending Home Sales
What is Newton?
Our Newton model attempts to determine the highest probability of future price direction by using advanced algorithmic and high-order mathematical techniques on the current market environment to identify trends in underlying security prices. The Newton model scores securities over multiple time periods on a scale of 0-20 with 0 being the worst and 20 being the best possible score. Trend & level both matter.
Technical trading models are mathematically driven based upon historical data and trends of domestic and foreign market trading activity, including various industry and sector trading statistics within such markets. Technical trading models, through mathematical algorithms, attempt to identify when markets are likely to increase or decrease and identify appropriate entry and exit points. The primary risk of technical trading models is that historical trends and past performance cannot predict future trends and there is no assurance that the mathematical algorithms employed are designed properly, updated with new data, and can accurately predict future market, industry and sector performance.