This Week on Wall Street - Week of May 14th

Equities are striving to maintain their recent momentum, buoyed by favorable earnings reports and comments from the Federal Reserve.

Market Commentary

Equities are striving to maintain their recent momentum, buoyed by favorable earnings reports and comments from the Federal Reserve. However, traders have approached the week with caution in anticipation of pivotal inflation reports, especially after recent data revealed a rise in consumer inflation expectations. A moderating yield curve could suggest that fixed-income investors are gaining confidence that persistent above target inflation is under control.

Stock market indices are nearing a critical technical decision point. The S&P 500 has recovered from its April downturn and is now testing the all-time high of 5,260 set in March. This resistance level, coupled with other medium-term uptrend factors, is crucial for sustaining momentum. A breakthrough by the bulls could clear the way for further gains, while a setback may necessitate a period of consolidation before retesting.

This week, inflation is at the forefront of the economic data agenda. Tuesday’s release of the Producer Price Index (PPI) will shed light on medium-term inflation trends, paving the way for Wednesday’s pivotal Consumer Price Index (CPI) report. Persistent above target inflation has been a major concern for investors, and any sign of easing could provide the Fed with more leeway in adjusting its policy. With rising hopes for potential rate cuts later this year, easing inflation is essential for keeping this option viable. Speaking engagements from several Fed members later in the week will provide further insights from key central bank officials.

Our Newton models indicate a resurgence in Foreign Developed markets, particularly in Europe where stocks have recently outperformed their US counterparts. Utilities continue to lead, showing robust performance over the past few weeks, with cyclical sectors like Industrials and Materials also making strong gains. High Yield bonds have suffered given hesitation for higher risk credits from investors.

Economic Releases This Week

Monday: None

Tuesday: Producer Price Index, Fed Chair Jerome Powell Speaks

Wednesday: Consumer Price Index, Retail Sales

Thursday: Initial Jobless Claims, Philadelphia Fed Manufacturing Survey, Housing Starts

Friday: US Leading Economic Indicators

Stories to Start the Week

OpenAI launches new AI model and desktop version of ChatGPT

Kraft Heinz Explores Sale of Oscar Mayer: The Famed Hot-Dog Business

On Tuesday, the US government is set to announce that tariffs on Chinese vehicles will quadruple from the existing 25% to 100%

A federal judge in Texas temporarily blocked a new federal rule that would limit fees on late credit card payments to $8 per month


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.