QVMM - Rising Tide Lifts S&P 500 To Close First Half Of 2023
2023-07-03 21:33:00 ET
Summary
- After receding last week, the tide rolled in favor of the S&P 500. The index rose to 4450.38, up 2.4% from the previous week's close.
- The rising tide that lifted stock prices during the final week of the second quarter of 2023 emanated from the banking sector.
- Unless something changes between now and next week, our initial working assumption is that investors are fully focusing their forward-looking attention upon the current quarter of 2023-Q3.
After receding last week, the tide rolled in favor of the S&P 500 ( SPX ). The index rose to 4450.38 , up 2.4% from the previous week's close.
Since the end of 2022, the index has increased 15.9%. The index would have to rise another 7.8%, however, to reach its previous record peak of 4,796.56, which was recorded at the beginning of 2022.
The rising tide that lifted stock prices during the final week of the second quarter of 2023 emanated from the banking sector. With all 23 major banks in the U.S. passing the Federal Reserve's latest stress tests on their capital level, several went on to announce significant dividend increases before the end of the week.
In the latest update for the dividend futures-based model 's alternative futures chart, the news was sufficient to move the trajectory of the index back toward the middle of the redzone forecast range.
We'll be advancing the alternative futures chart to look forward through the end of the third quarter of 2023 in the next edition of the S&P 500 chaos series. When we do, it will show the current redzone forecast range extending for just a few weeks more, before we might return the dividend futures-based model's regular projections, without having to compensate for the "echoes" of past volatility.
Unless something changes between now and next week, our initial working assumption is that investors are fully focusing their forward-looking attention upon the current quarter of 2023-Q3. How long they might continue to do that will be a primary question of interest in the weeks ahead.
Until then, let's look back at the week that was for our summary of its market-moving headlines.
Monday, 26 June 2023
- Signs and portents for the U.S. economy:
- Fed officials claim they're serious about fighting inflation:
- Bigger trouble, stimulus developing in China
- BOJ officials thinking they may rethink never-ending stimulus:
- Eurozone sees signs of improvement but forecast remains gloomy:
- Wall Street slips as investors eye Russia, Fed hikes, quarter-end
Tuesday, 27 June 2023
- Signs and portents for the U.S. economy:
- Bigger trouble, stimulus developing in China:
- JapanGov officials starting to really worry about falling currency:
- ECB officials fear lingering inflation, excited for more rate hikes, and think they should maybe stop Eurozone banks from doing business in Russia:
- Wall Street closes higher as upbeat economic data allays slowdown fears
Wednesday, 28 June 2023
- Signs and portents for the U.S. economy:
- Fed officials thinking about resuming rate hikes:
- Bigger trouble developing in China:
- Bigger trouble developing in… Canada:
- BOJ officials suggest they may end never-ending stimulus if inflation continues:
- Eurozone officials thinking about tightening fiscal policy to fight inflation; ECB officials getting results they want but draw criticism, still excited to hike rates but are thinking about a pause:
- Nasdaq, S&P, Dow end mixed as Powell comments offset boost from growth stocks
Thursday, 29 June 2023
- Signs and portents for the U.S. economy:
- Fed officials say they'll resume hiking rates if inflation moves in wrong direction, are watching out for more bank failures:
- Bigger trouble, stimulus developing in China:
- Bigger trouble developing in… Canada:
- JapanGov officials really worried about yen falling more:
- ECB officials not getting other results they want:
- Dow, S&P gain with bank rally countering rate worries
Friday, 30 June 2023
- Signs and portents for the U.S. economy:
- Fed officials think money supply is tighter than during Great Recession, thinking about hiking rates more:
- Bigger trouble, targeted stimulus developing in China:
- BOJ officials getting inflation they wanted, cost may be end of never-ending stimulus:
- ECB officials worry about sticky inflation, even though Eurozone inflation falls:
- Wall St rallies; Nasdaq hits 40-yr milestone, Apple scales $3 trillion
The CME Group's FedWatch Tool continues to project the Federal Reserve will hike the Federal Funds Rate by just a quarter point to a target range of 5.25-5.50% when it meets on 26 July (2023-Q3). After that, the FedWatch Tool anticipates the Fed's series of rate hikes that began in March 2022 will be done, with no changes until early 2024. The FedWatch Tool indicates investors expect the Fed will initiate a series of quarter-point rate cuts at six- to twelve-week intervals starting in March 2024.
The Atlanta Fed's GDPNow tool estimate of the real GDP growth rate for the current quarter of 2023-Q2 increased to +2.2% from the +1.9% growth rate forecast a week earlier.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Rising Tide Lifts S&P 500 To Close First Half Of 2023