Nasdaq-100 Index. Meet and Greet March Quarter Earnings Season.
Updated
US stock indices, including the benchmark American economy S&P500 index (SPX) and US BigTech Nasdaq-100 index (NDX), are retreating from their yearly highs, moving to a more aggressive decline last Friday, April 12.
Investors digest the first portion of earnings reports for March quarter 2024 - traditionally starting with financial sector Earnings reports.
New Earnings season has begun! Perfect!
Well... sounds good. Anyway...
JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) reported first-quarter earnings that beat forecasts, but a large number of persistent inflation pressures are still building and continuing.
JPMorgan CEO James "Jamie" Dimon warned that while the stock market is healthy and most economic indicators look favorable, there are still significant risks that could arise at any time.
"Looking ahead, we remain alert to a number of significant uncertain forces. First, the global landscape is troubled, horrific wars and violence continue to cause suffering, and geopolitical tensions are rising. Second, there appear to be a large number of persistent inflationary pressures. Pressure that is likely to continue," - Dimon said on the conference call.
On the inflation front, US import prices rose for the third straight month in March, slightly above the consensus forecast of 0.4% month-on-month. Almost all of the rise in import prices was driven by the recent rise in oil prices.
The fight against inflation - which has transformed into a classic chronic illness from a relatively minor cyclical problem driven by a low Covid-19 base - appears to have reached a stalemate, and the first rate cut will not occur until December, Bank of America (BAC) now says.
Despite the fact that at the beginning of 2024, the market was almost 100% confident that at least one rate cut would take place by the June FOMC meeting, and by the December meeting, the number of rate cuts could reach three.
Monetary easing by June is looking more and more like an unattainable dream, tempered by the latest data.
Recent inflation data, while in line with expectations, doesn't give the Federal Reserve much reason to rush.
But if the central bank doesn't cut rates by June, it will likely delay any cuts until March 2025, Bank of America strategists said.
In reality, long-term forecasting of the US Federal Reserve's monetary policy curve is not an easy task, given that only forecasts for the next FOMC meeting, which is scheduled for May 1, and for which the market does not factor in a change in interest rates, can be relatively reliable.
Of much greater significance is that the same arguments and theses that are presented in the reports of the largest American banks - the locomotive of the American economy - may find their repetition or imitation in Earnings reports for Q1'2024 of dozens and hundreds of other companies over the next two-three months.
Technically, the main chart of the Nasdaq-100 Index (NDX) featured in the idea is in a long-term positive trend of a weakly rising channel, above its 5-year SMA.
At the same time, taking into account the possibility of escalation of macroeconomic and political risks, one cannot exclude the prospect of its decline to the lower border of the channel - down to the levels of 12,500 - 13,000 points.
Also lets take into account the fact that the entire 10-12 percent Nasdaq-100 increase from Q4'21 highs to nowadays can be easily represented as the transposition of a 200% increase in the shares of only one company - Nvidia (with its near 6% allocation in the index), - which increased in price from $320 to over $960 per share over the same period of time - from Q4'21 by Q1'24.
Investors digest the first portion of earnings reports for March quarter 2024 - traditionally starting with financial sector Earnings reports.
New Earnings season has begun! Perfect!
Well... sounds good. Anyway...
JPMorgan (JPM), Citigroup (C) and Wells Fargo (WFC) reported first-quarter earnings that beat forecasts, but a large number of persistent inflation pressures are still building and continuing.
JPMorgan CEO James "Jamie" Dimon warned that while the stock market is healthy and most economic indicators look favorable, there are still significant risks that could arise at any time.
"Looking ahead, we remain alert to a number of significant uncertain forces. First, the global landscape is troubled, horrific wars and violence continue to cause suffering, and geopolitical tensions are rising. Second, there appear to be a large number of persistent inflationary pressures. Pressure that is likely to continue," - Dimon said on the conference call.
On the inflation front, US import prices rose for the third straight month in March, slightly above the consensus forecast of 0.4% month-on-month. Almost all of the rise in import prices was driven by the recent rise in oil prices.
The fight against inflation - which has transformed into a classic chronic illness from a relatively minor cyclical problem driven by a low Covid-19 base - appears to have reached a stalemate, and the first rate cut will not occur until December, Bank of America (BAC) now says.
Despite the fact that at the beginning of 2024, the market was almost 100% confident that at least one rate cut would take place by the June FOMC meeting, and by the December meeting, the number of rate cuts could reach three.
Monetary easing by June is looking more and more like an unattainable dream, tempered by the latest data.
Recent inflation data, while in line with expectations, doesn't give the Federal Reserve much reason to rush.
But if the central bank doesn't cut rates by June, it will likely delay any cuts until March 2025, Bank of America strategists said.
In reality, long-term forecasting of the US Federal Reserve's monetary policy curve is not an easy task, given that only forecasts for the next FOMC meeting, which is scheduled for May 1, and for which the market does not factor in a change in interest rates, can be relatively reliable.
Of much greater significance is that the same arguments and theses that are presented in the reports of the largest American banks - the locomotive of the American economy - may find their repetition or imitation in Earnings reports for Q1'2024 of dozens and hundreds of other companies over the next two-three months.
Technically, the main chart of the Nasdaq-100 Index (NDX) featured in the idea is in a long-term positive trend of a weakly rising channel, above its 5-year SMA.
At the same time, taking into account the possibility of escalation of macroeconomic and political risks, one cannot exclude the prospect of its decline to the lower border of the channel - down to the levels of 12,500 - 13,000 points.
Also lets take into account the fact that the entire 10-12 percent Nasdaq-100 increase from Q4'21 highs to nowadays can be easily represented as the transposition of a 200% increase in the shares of only one company - Nvidia (with its near 6% allocation in the index), - which increased in price from $320 to over $960 per share over the same period of time - from Q4'21 by Q1'24.
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Apr 20, 2024👉 The Nasdaq-100 stock index fell for the fourth consecutive week in a row amid weakness in Super-Duper Ultra-Mega-Cap tech companies.
👉 The current decline is the longest streak of continuous market decline in the last two years, since second quarter of 2022.
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