Key Takeaways
- Markets Rebound Slightly, But Uncertainty Over Tariffs And Earnings Remains High
- Investors Watch PCE Report And CoreWeave IPO For Market Sentiment Signals
- S&P 500 Faces Resistance At 200-Day Moving Average Amid Cautious Optimism
Markets ended a four-week losing streak last week. While the gains were relatively marginal, it did at least stop the bleeding. The question now becomes, have we seen the bottom or is there more to come? I think this week will give us more than a few opportunities to find out.
One of the biggest stories for the market continues to be tariffs. The on again, off again nature and moving target with respect to what will and won’t be taxed, as well as the rate, has been perplexing, to say the least. April 2nd is when tariffs are expected to kick in, but on Friday, President Trump said the tariffs might be more targeted than initially thought. We’re still over a week away from when the tariffs are expected to begin, therefore, this is something I’ll be monitoring, and I suspect we will hear quite a bit more about them this week.
In the meantime, we do have a few earnings this week and some economic data worth noting. On the earnings front, KB Homes is scheduled to report after the close today. GameStop reports after the close tomorrow. Then on Thursday, Lululemon releases their earnings after the close. Also, while there are a few companies still reporting, we’re just under three weeks away from first quarter earnings. According to FactSet, analysts expect first quarter earnings to increase 7.1% year-over-year. That would make for seven consecutive quarters of growth. However, it’s also worth noting that 7.1% forecast is down from 11% as analysts have become more pessimistic, according to MarketWatch.
On the economic calendar, there are a handful of reports, but the big one comes at the end of the week. On Friday, the Personal Consumption Expenditures (PCE) report is due out. This is the report the Federal Reserve Open Market Committee (FOMC) relies most heavily on when it comes to monetary policy. With the Fed in a sort of wait and see mode, I would not be surprised if Friday sees a lot of activity.
Also worth noting this week, we’re expecting to get an initial public offering (IPO) from CoreWeave. The company operates in the cloud computing space and will trade under the ticker symbol CRWV. CoreWeave is hoping to raise somewhere between $27 and $32 billion. I’ll be closely monitoring this one because I think it will serve as a proxy for the market’s appetite for new issues. We haven’t had many IPOs of late and I think there are a number of private companies who will be interested in how this goes. Strong demand could encourage more companies to go public. But if the IPO isn’t well received, it could be discouraging for more new issues.
One other interesting observation. March 24th of 2000 marked the peak of the dotcom bubble. March 24th of 2020 also marked the low point for the S&P 500 in 2020. As far as specific dates go, today does have some history to it.
For today, index futures are trading higher in premarket activity. Both the S&P 500 and Nasdaq are up over 1%. For the S&P 500, the 200-day moving average is 5750. This is a level a lot of market technicians watch. If you recall, when markets began moving lower, we bounced off the 200-day moving average a few times before finally falling below it. Therefore, I would not be surprised if it takes more than one try to break through to the upside. Additionally, as I mentioned last week, the selloff we’ve seen has been orderly. There has still not been any capitulation selling. With the major concerns that caused this market to pull back still being unsettled, I remain cautious that we’re out of the woods. As always, I would stick with your investing plan and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.