QVML - The S&P 500 Rises Into A Bull Market

2023-06-12 21:05:00 ET

Summary

• The S&P 500 has officially entered a bull market, rising over 20% from its bottom of 3,577.03 on 12 October 2022.
• Despite the bull market, the S&P 500 is still 10.4% below its record high closing value of 4,796.86 from 3 January 2022.
• The Federal Reserve is expected to hold the Federal Funds Rate's target range at 5.00-5.25% in June, with a potential rate hike in July.

Perhaps the biggest news of the week is that the S&P 500 (Index:[[SPX]]) rose 0.4% to close the week at 4298.86 .

In doing so, it rose over 20% from its bottom of 3,577.03 on 12 October 2022. According to MarketWatch, that's enough for the rising trend for stock prices since that date to exit the bear market that began after the index peaked on 3 January 2022. The S&P 500 is now "officially" in a bull market.

Although it now qualifies as a bull market, the S&P 500 is still some 10.4% below its record-high closing value of 4,796.86 from 3 January 2022.

We find the index's trajectory continues to put it well within the redzone forecast range in the latest update for 2023-Q2's alternative futures chart. That forecast range continues to anticipate an upward trajectory for the index through the end of the quarter.

While we find the wire service does generally very good work, when its editors' objectivity goes off the rails, it needs to be pointed out. In this case, because it created a need for us to identify additional news sources that are more capable of objectively presenting relevant market news, we can now recommend sources like Seeking Alpha's Trending News section and Morningstar's Market News ' aggregation of other market wire news services for their less slanted presentation.

With that said, here are the market-moving headlines for the week that was:

Monday, 5 June 2023

• Signs and portents for the U.S. economy:
  • Defense spending lifts US factory orders in April
  • U.S. services sector slows in May; prices paid gauge falls to three-year low - ISM survey
  • Analysis-US hotel developers run out of cash as construction lending dries up
  • Oil rises on Saudi plan to deepen output cuts from July
    • Brent may rise toward $100/bbl as Saudi output cut could worsen supply gap - analysts
  • US banks could face 20% boost to capital requirements - WSJ
    • Forever in debt: Why U.S. loans are getting longer
• Bigger trouble developing in China
  • China's May imports to fall again, exports slip into red
• ECB minions see reason to keep hiking rates despite slowing Eurozone economy:
  • ECB's Lagarde sees no peak in core inflation despite 'moderation'
  • Euro zone business growth slowed in May as factories struggled-PMI
• S&P 500 ends lower as traders eye potential pause in rate hikes
  • Surging US megacap stocks leave some wondering when to cash out
  • Insider buying in US regional banks at 3-year high as execs look to bolster confidence
  • Markets brace for deluge of Treasury bill supply after US debt deal

Tuesday, 6 June 2023

• Signs and portents for the U.S. economy:
  • Oil falls as economic fears overshadow Saudi output cut
• Bigger stimulus, currency support developing in China:
  • China may cut rates further in H2, government researcher says
    • China's property shares surge as investors bet on stimulus hopes
  • Exclusive-China's state banks told to lower cap on dollar deposit rates -sources
• JapanGov minions rolling out new fiscal stimulus:
  • Japan PM Kishida unveils economic action plan on 'new capitalism'
• ECB minions getting desired results from interest rate hikes:
  • Euro zone retail sales flat in April, with weaker food, fuel sales
  • German industrial orders fall unexpectedly in April
• US stocks end up as Fed, CPI loom large next week

Wednesday, 7 June 2023

• Signs and portents for the U.S. economy:
  • Oil prices rise as Saudi output cuts outweigh weak demand signals
  • US trade deficit widens to 6-month high, expected to dent economic growth
• Fed minions expected to take first ever break in rate hike cycle next week:
  • One-off rate hike 'skip' would be Fed first: McGeever
    • Fed seen on hold in June, but one-third of economists expect a hike soon
• Bigger trouble developing in China:
  • China property liquidation risk heightened by delisting threat, says S&P
  • Taiwan May exports drop again as China weighs; outlook stays dim
  • China's exports tumble in May as global demand falters
• Bigger stimulus developing in China:
  • China big state banks to cut deposit rate from Thursday -state media
• Central bankers still excited to keep hiking rates as they get desired results:
  • Australia cenbank warns of more hikes ahead after raising rates to 11-yr high
    • Australia Q1 GDP growth hits weakest pace in 1-1/2 years as consumers struggle
  • Bank of Canada hikes rates to 22-year high, more increases expected
• ECB minions thinking rate hikes are taking too long to deliver desired results:
  • ECB rate hikes make take longer than usual to feed through: Schnabel
    • German industrial output rises less than expected in April
• S&P 500, Nasdaq close lower as traders cash in on latest megacap rally

Thursday, 8 June 2023

• Signs and portents for the U.S. economy:
  • Oil prices partially recover after US, Iran deny reported nuclear deal
  • US weekly jobless claims race to 1-1/2-year high, economists urge caution
• Bigger stimulus developing in China:
  • China's biggest state banks cut deposit rates
• BOJ minions traumatized by decades of deflation want to keep never-ending stimulus alive:
  • Analysis-Trauma of Japan's deflation battle keeps BOJ wary of policy shift
• Eurozone "technical" recession confirmed:
  • Euro zone slips into recession after Germany, Ireland revisions
    • Factbox-European companies cut jobs as economy sputters
• Wall Street ends up amid record low volatility ahead of eventful week

Friday, 9 June 2023

• Signs and portents for the U.S. economy:
  • Oil posts second weekly decline as demand concerns overshadow Saudi cut
  • U.S. 'aspirational' shoppers are spending less on fashion, jewelry
• Bigger trouble developing in China, stimulus showing some effects:
  • China's factory deflation steepens as demand wanes
  • China's May new yuan loans seen rebounding: Reuters poll
    • China's central bank upbeat on Q2 GDP growth, confident on 2023 targets
• BOJ minions claim to be happy to see inflation, will keep never-ending stimulus alive:
  • BOJ's Ueda flags shift in corporate pricing, upward inflation bias
  • BOJ set to keep ultra-low rates, may signal inflation overshoot
• Nasdaq, Dow eke out weekly gains, S&P 500 pushes further into bull market
  • How US stocks rose 20% from their lows, and where they might be going

The CME Group's FedWatch Tool projects the Federal Reserve will hold the Federal Funds Rate's target range at 5.00-5.25% when it meets on Wednesday, June 14. But that will change six weeks later, when the Fed's Open Market Committee is expected to hike rates up to a target range of 5.25-5.50% on 26 July (2023-Q3). Based on its current projections, that will mark the peak for the Fed's rate hike cycle that began in March 2022. After that, the FedWatch Tool projects the Fed will initiate a series of quarter-point rate cuts at six- to twelve-week intervals to address recessionary conditions in the U.S. economy starting in November (2023-Q4).

The Atlanta Fed's GDPNow tool estimate of the real GDP growth rate for current quarter of 2023-Q2 bubbled up to +2.2% from the +2.0% growth rate it forecast a week earlier.

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