Not much happened during the trading week that ended on Thursday, 6 April 2023. The S&P 500 (Index: SPX) ended the week at 4105.02, some 4.18 points or 0.1% lower than it closed out the previous trading week.
In between, the index bounced between 4,090.38 and 4,124.51 as investors had little new market moving information to absorb during the Good Friday holiday-shortened trading week.
So let's look forward instead! The following chart shows the forecast of the S&P 500's potential trajectories from the dividend futures-based model through the second quarter of 2023.
At this writing, the alternative future trajectories appear gloomier than they really are. That's because the model incorporates historic stock prices as the base reference points from which it projects the future. The upcoming period indicated by the shaded vertical bands represents when those projections will be notably affected by the echoes of past volatility in stock prices.
We can reasonably compensate for the echo effect and will add a redzone forecast range to the chart in next week's update. For now however, the chart indicates stock prices are mostly consistent with investors focusing on the current quarter of 2023-Q2 in setting current day stock prices. That's because the Federal Reserve's upcoming meetings during this quarter are expected to mark the peak for how high the Federal Funds Rate will reach before the Fed might reverse course and begin cutting interest rates instead.
Looking backward, here's a recap of the past week's market moving headlines, in which we're also featuring the headlines from Friday, 7 April 2023 that may affect how stock prices will change when the new week's trading begins.
- Monday, 3 April 2023
-
- Signs and portents for the U.S. economy:
- Oil leaps 6% as OPEC+ shocks markets by cutting output target
- Brent crude jumps $5/bbl after output cuts; stocks rise
- OPEC+ announces surprise oil cuts; U.S. calls move inadvisable
- OPEC+ cuts put $100/bbl oil back in sight
- Marketmind: Crude cut complicates Q2
- Why is OPEC cutting oil output?
- US construction spending slips in February
- US manufacturing near three-year low; casts a shadow over economy
- Bigger trouble developing in Japan, China worried about banks:
- Japan manufacturers' mood sours on global slowdown, service sector bounce cushions blow
- Japan factory activity shrinks at slowest pace in five months -PMI
- BOJ bought record $1 trln JGBs last year to defend ultra-low rate policy
- China's central bank calls for stronger defences against financial crisis
- Bigger trouble developing in Eurozone:
- S&P 500 ends higher as oil stocks rally; Tesla tumbles
- Tuesday, 4 April 2023
-
- Signs and portents for the U.S. economy:
- Oil steady as markets weigh OPEC+ surprise cuts amid demand woes
- JPMorgan's Dimon says US banking turmoil not over, sees long repercussions
- US labor market loosening as job openings approach two-year low
- U.S. factory orders post second straight monthly decline in February
- Fed minions say they want to keep cranking up interest rates:
- Bigger trouble, stimulus developing in China:
- Risks loom over China's top tier banks from property downturn, higher costs
- China will safeguard yuan and financial stability, central bank governor says
- Central banks pausing rate hikes, thinking about going into reverse:
- Australia pauses rate hikes to assess tightening impact, Q1 inflation in focus
- BoE might need to cut rates sooner than thought, Tenreyro says
- "Sources" say Germany won't have recession:
- Exclusive-Germany forecast to skirt recession - sources
- German exports rise significantly more than expected in February
- ECB minion says "Hey, look at Portugal!":
- ECB's Centeno says mortgage default risk in Portugal is low
- ECB's Makhlouf says impact of rate hikes 'well underway'
- Wall Street ends down as weak economic data fuels recession fears
- Wednesday, 5 April 2023
-
- Signs and portents for the U.S. economy:
- U.S. service sector slows in March; inflation cooling - ISM survey
- U.S. trade deficit widens in February as goods exports fall
- Fed minion not so sure of rate hike in May 2023:
- Central bankers surprisingly stuck on rate hikes:
- BOJ minions looking for reasons to keep never-ending stimulus alive:
- Japan's economy runs below capacity, low rates may stay in place
- Japan's March service-sector grows at fastest rate in over nine years - PMI
- Eurozone, UK see economic improvement:
- Euro zone recovery gathered pace in March on demand for services -PMI
- German services sector activity picks up in March -PMI
- German industrial orders rise more than expected in February
- UK service firms report second month of growth as prospects improve -PMI
- ECB minions see Eurozone inflation:
- S&P 500 ends lower as recession fears take center stage
- Thursday, 6 April 2023
-
- Signs and portents for the U.S. economy:
- Oil steady, notches 3rd weekly gain after shock OPEC+ cuts
- 'Powell's curve' plunges to new lows, flashing US recession warning
- Fed minions want to keep hiking rates:
- Signs of traction developing in China, Eurozone:
- China March services activity accelerates on new orders - Caixin PMI
- German industrial output rises more than expected in February
- Central bankers slowing rate hikes:
- ECB minions getting excited to hike rates again:
- Wall Street ends higher as investors eye upcoming jobs data
- Friday, 7 April 2023 (Market Closed)
-
- Signs and portents for the U.S. economy:
- BOJ minions may be seriously thinking of ending never-ending stimulus:
The CME Group's FedWatch Tool estimates a 71% chance the Fed will Federal Funds Rate by a quarter point to a target range of 5.00-5.25% at its upcoming meeting on 3 May (2023-Q2). After that, the FedWatch tool anticipates a series of quarter point rate cuts starting from 26 July (2023-Q3) and continuing at six-to-twelve-week intervals through the CME FedWatch tool's available forecast period, which extends through 25 September 2024 (2024-Q3). The CME FedWatch Tool's most distant forecast anticipates the Federal Funds Rate will reach a target range of 3.00-3.25% at that date.
The Atlanta Fed's GDPNow tool's projection for real GDP growth in the first quarter of 2023 plunged to +1.5% from the previous week's estimate of +2.5%. The GDPNow tool is now fully looking backward instead of forward and will continue to do so until the U.S. Bureau of Economic Analysis releases its advance estimate of real GDP during 2023-Q1 on 27 April 2023.
Image Credit: Photo by Sophie Backes on Unsplash.