Gerald Sparrow President & Founder, Sparrow Capital Management, Inc.
Stocks Pop
Stocks were flat for much of last week amid a batch of new earnings, a 0.25% interest rate hike, and strong economic data. After beginning with gains, stocks lost momentum following the Fed’s expected rate-hike announcement on Wednesday. A bounce on Thursday sparked by a positive mega-cap tech company earnings reversed after bond yields increased.
Stocks recovered strongly Friday on the release of the personal consumption expenditures price index, which fell to its lowest level in two years.4
Much of the market action was related to earnings results. With 44% of S&P 500 companies reporting, 78% have exceeded Wall Street forecasts.5
Recession Deferred
Expectations of a recession were high coming into 2023. Last week may have erased this recession narrative overhang.
Second-quarter gross domestic product (GDP) data released last week was one big reason why. Economic activity expanded by 2.4%, which was above the forecast of two percent and represented an acceleration from its first quarter GDP of 2.0%. Consumer spending was a major driver of that expansion, rising 1.6%.6
Joining the recession-deferred camp this week was Fed Chair Powell, who stated that the Fed was no longer forecasting a recession.
Footnotes:
4. CNBC, July 28, 2023.
5. CNBC, July 27, 2023.
6. CNBC, July 27, 2023.
PHOTO CREDIT https://www.shutterstock.com/g/adam121
Via SHUTTERSTOCK
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