The S&P 500 (SPY) managed to break through the important 4,000 level, which is good news for stock traders. Looks like we might be able to climb that wall of worry after all! How did we manage to turn things around after “the worst week” yet in 2023? Read on to find out.
(Enjoy this updated version of my weekly commentary, originally published March 3, 2023 in the POWR Shares Under $10 Newsletter).
he’s seen a few positive catalysts over the past two days that have kicked things in a positive direction and pushed stocks back above 4,000 (although we still have some way to go before retesting the important 4,100 level).
First, 10-year Treasury yields also fell below 4%, which was a positive sign for the market.
February’s PMI data also caught traders’ attention. The PMI improved to 50.6, beating the analyst consensus of 50.5. ISM Non-Manufacturing PMI fell from 55.2 to 55.1, but still managed to beat expectations.
According to Andrew Hunter, Deputy Chief US Economist at Capital Economics, the numbers suggest the economy is growing, but not as fast as some thought.
Most market segments, especially cyclical consumer and real estate stocks, had a good day, except defensive consumer stocks, which did not see much upward movement.
This indicates that traders are still in a “risk on” mode, meaning they are willing to invest in more volatile assets at this time. That’s great for our sub-$10 stocks.
If the S&P 500 (SPY) stays where it is, we will have a positive week, which is a big win after last week, which was one of the worst so far this year.
The Federal Reserve also made headlines this week when it released its semiannual Monetary Policy Report to Congress. The report lays out the Fed’s plan to keep raising interest rates to bring inflation back to 2%.
Raphael Bostic, president of the Atlanta Federal Reserve, wrote an essay calling for the central bank to raise its policy rate by 50 basis points to a range of 5%-5.25% and then keep it at that level well into 2024. to hold.
He also said he is monitoring the data and will adjust his policy trajectory if necessary.
The Fed raised its benchmark rate by a quarter of a percentage point in February and will release new forecasts after the March 21-22 meeting.
Just like we saw last year, the market is likely to make some big moves based on what Fed officials say between now and then.
While there were some wins for the bulls this week, much more will have to happen before the S&P 500 catches up to the important 4,100 level.
But despite the volatility, our portfolio performed well last year, and I expect we’ll see the same this year, especially given that a number of positive catalysts are on the way for a handful of our holdings.
What to do now?
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All the best!
Chief Growth Strategist, StockNews
Editor, POWR Newsletter Stocks Under $10
SPY Stocks. Year-to-date, SPY has gained 5.69% versus a percentage increase of the benchmark S&P 500 index over the same period.
Meredith Margrave has been a well-known financial expert and market commentator for the past two decades. She is currently the editor of the POWR growth And POWR shares under $10 newsletters. Learn more about Meredith’s background, along with links to her most recent articles.