On Wall Street without continuation. Nasdaq with its best week since November

After seven consecutive sessions of growth, the New York indexes did not want to go up anymore. In the background there were concerns about negotiations with Iran and the future of shipping through the Strait of Hormuz. Despite a weaker Friday, the Nasdaq Composite posted its biggest weekly gain since November.

The S&P500 index ended the week at 6,816.89 points, which meant a regression of only 0.11% compared to Thursday's reference price. In this way, this benchmark interrupted the seven-session upward streak. But for the entire week, the S&P500 grew by over 3.5% after a 3.4% increase in the previous week.

The Nasdaq Composite also posted its best week since November, rising nearly 5% over the past five sessions after gaining 4.4% last week. It was a rebound from seven-month lows after the US stock market retreated on fears of stagflation triggered by the oil crisis.

Advertisement

The last few days have not brought any breakthrough in this section. On the third day of the ceasefire between Iran and the US, the Strait of Hormuz remained generally closed to navigation. According to data from the Marine Traffic website prepared by the BBC, since the truce was concluded on the night from Tuesday to Wednesday, Iran has allowed 19 ships to pass through the strait, most of which are container ships and only four are tankers. Hundreds of tankers are at anchor on both sides of Hormuz, awaiting the outcome of negotiations between Tehran and Washington's envoys that begin on Saturday. President Donald Trump did not hide his irritation with this situation, once again demanding that the Iranian authorities fully open the strait.

For now, investors are assessing the “destruction” in the economy in March. On the inflation front, everything went as expected. Although the March CPI inflation in the United States accelerated significantly from 2.4% to 3.3%, the so-called Core inflation rose only slightly (2.5% to 2.6%). Such a reading would suggest that the inflationary wave from the fuel markets has not (yet?) spread to other sectors of the US economy.

Despite this, American consumers have a very negative opinion about the economic situation. April

the University of Michigan index reading dropped to 47.6 points. compared to 53.3 points in March. This is the lowest reading in the over 70-year history of this indicator. The April study was conducted before the truce with Iran was announced. Moreover, in recent years, the American consumer has been famous for complaining widely in surveys and then spending money (often borrowed) on purchases anyway.

However, it is worth noting the sharp increase in inflation expectations among Americans. The inflation expected by respondents over the horizon of the year increased to 4.8%. compared to 3.8 percent in March and economists' expectations at 4.2%. In the long term it amounted to 3.4%. compared to 3.2 percent in March and compared to the expected 3.4 percent

– Geopolitics is now in the spotlight. It dominated the headlines and the market narrative. The market is not based on fundamentals now, says Tim Ghriskey, senior strategist at Ingalls & Snyder in New York, speaking for Reuters. “There's a lot of fear right now, a lot of unknowns,” Ghriskey added.

Next week, the reporting season for the first quarter begins on Wall Street. Analysts expect a very solid improvement in corporate profits. According to LSEG data, the expected increase in EPS (i.e. profit attributable to the S&P500 index) is 13.9% y/y.

K.K

The publication contains affiliate links.

Source: