Stocks surged higher in the closing days of a holiday-shortened trading week, ignited by a political resolution on raising the debt ceiling and a strong employment report.
The Fed was guiding the markets into thinking this was potentially the last rate hike in this cycle.
The debt ceiling saga is unfortunately still ongoing, but definitive progress has been made. According to reports, the Biden Administration and Congressional Republican negotiators have agreed to a debt ceiling/budget deal.
The industrial sector has lagged the S&P 500 index by roughly -720 basis points this year as of May 16, 2023, driven by weakness in machinery, aerospace, and defense stocks.
Stocks rallied last week with growing confidence over reaching a deal on raising the debt ceiling and avoiding a technical debt default by the U.S.
The week got off to a quiet start as investors waited on April's two key inflation reports, but stocks broke out of their lethargy and moved higher after consumer prices rose less than forecasted.
The Fed's recent actions have led to a reevaluation of what it means to 'fight the Fed,' and it's crucial for investors to understand the difference between a trading opportunity and an investable rally.
The 'Sell in May' strategy is also referred to as the 'Halloween indicator' due to the tendency of stock market returns to improve after Halloween.
When one of your stocks gets a takeout offer, it's natural to wonder what to do next. In the case of Ruth's Hospitality Group, the company received a merger agreement from Darden Restaurants, which would acquire Ruth's shares at $21.50 per share. As an investor, you need to consider the potential outcomes and make a decision based on your investment goals and risk tolerance.
In the event of a non-resolution, market reactions could continue to exude extraordinary volatility with very rapid moves in short-term rates and sharp drawdowns in equities, commodities, and other risk assets.
The stock market slipped in the wake of the latest rate hike decision by the Federal Open Market Committee (FOMC), despite solid earnings from one mega-cap tech firm and a strong employment report.
Tighter credit conditions, recent banking turmoil, and higher mortgage rates gave a well-needed break to the acceleration of Fed rate hikes. Instead, they gave a false signal to the markets as the Fed was going to slow its pace.