weekly market update 2/02/2024

The Federal Reserve and Chairman Jerome Powell attempted to rein in investor expectations this week, but a blowout jobs report for January and strong earnings, particularly from Meta, Microsoft, and Amazon powered stocks higher.  S&P 500 has now risen 13 of the last 14 weeks and is up nearly 20% in the past three months.  In our opinion, stocks are firmly in overbought territory.  Heading into next week, investors will be watching the fourth quarter earnings season, as over 20% of companies in the S&P 500 will report.  Oddly enough, however, the most important market event might be on Sunday when Jerome Powell appears on 60 Minutes to discuss interest rates and inflation…

FEBRUARY CROSSWINDS

Markets followed seasonal trends very closely last year and while past performance is no guarantee of future results, February is historically a very bifurcated month for stocks.  Per Goldman Sachs (see chart below), the first half of February is historically strong and over the first two trading days of this month the S&P 500 is coincidently up 1.25% (per FactSet).  However, since 1928 the back half of February is historically the worst two-week period for stocks of the year.  To be clear, we see upside for stocks in 2024, but it certainly seems as though this frenetic market rally over the last 14 weeks lines up well with seasonal trends for a healthy pullback or market pause.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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