

The past week was a real ‘slam dunk’ for investors as markets continued to surge higher. Over the past week, a major unknown for the market was resolved. Markets gained clarity about the week one actions of the new administration, which certainly featured a flurry of fresh executive actions. Investors welcomed the surprise that no new tariffs were featured amongst the first actions of the new administration. Now, this is not to say that they are not on the way, but the significance of seeing the administration delay action and punt regarding the tariff issue, even if only temporarily, was seen as positive in the eyes of investors. Additionally, the slate of Q4 earnings that came in last week produced mostly solid results which aided in boosting markers. Thus far, only about 16% of S&P 500 companies have reported their Q4 results, however, of those a strong 80% have produced EPS beats which is higher than the historical average. The combination of these positive catalysts worked to fuel recent momentum in markets which saw the S&P 500 book three new All-time Highs to end the week. Additionally, both the Dow and Nasdaq composite indexes are quickly approaching their recent highs as well. As markets broadly rose over the past week, this was a clear indication of strong market breadth. This is confirmed by the NYSE Advance Decline index making yet again a new short term high and the Equal Weighted S&P 500 index rising 1.2% on the week. Taking stock of the bull market, after this past week, there are numerous signs that it is on solid footing. After the S&P 500 set three new ATH’s this past week, only 60.4% of the index’s stocks are trading above their 200-day moving average. This suggests that the market is far from an overbought state and has plenty of room to run to the upside and be further boosted as more stocks begin to participate in this current rally. It is our opinion that as more Q4 earnings are reported this will be the catalyst that will continue pushing stocks higher as long as earnings continue to beat expectations. This coming week will go a long way in deciding how much further this rally has left to run.

Key Events to Watch this Week
- FOMC Rate Decision
- Initial Q1 GDP Report
- December PCE Inflation
- Major Earnings this week
On the back of last week’s bullish momentum thrust across the markets, this coming week will feature a long list of fresh data for investors to digest which is certain to move markets. During the trading day on Wednesday, we will get the latest FOMC interest rate decision from Chair Powell. It is widely expected that the Fed will opt to leave the Fed Funds rate unchanged at this week’s meeting but what will draw more attention will be Chair Powell’s comments in the post-meeting presser. Investors will be on the lookout for any comments he makes regarding the trajectory of rates this year. Presently, markets are only discounting two rate cuts throughout 2025. In addition to this, there are two major macroeconomic reports due this week. On Thursday, in the premarket hours, the initial read of Q1 U.S. GDP will be released. Additionally, on Friday, prior to the market open, the PCE inflation read from December will be announced. Each of these reports is sure to garner lots of attention as markets will want to see if U.S. growth is maintaining a steady pace while also wanting to see further progress on inflation. As if those events are not enough to watch out for, likely the largest factor for the markets in the coming week will be the major earnings announcements we are expecting! This coming week is an enormous week for the market as many of the U.S. large-cap companies, including four of the ‘Magnificent 7’ companies, are set to report their latest earnings. Of the major earnings that we are watching most closely, the first will be Microsoft Corp, Meta Platforms, Inc., & Tesla, Inc., all of which will post their earnings after the market close on Wednesday. Following this, on Thursday, we will hear Q4 earnings results from Mastercard Inc. in the pre-market and then once the market closes both Apple Inc. & Visa Inc. will post their earnings numbers. There are numerous other significant earnings reports as well but these are the most crucial that we will be watching for.
Thank you for reading this week’s edition of the Weekly Market Periscope Newsletter, I hope you enjoyed it. Please lookout out for the next edition of the newsletter as we will give you a preview of the upcoming week’s important market events.
Thanks,

Blane Markham
Author, Weekly Market Periscope
Hughes Optioneering Team

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