The Market Is Holding Support While Awaiting the Next News Catalyst
The post-Fed bounce has stalled over the last two days, but the indexes remain in good shape as investors contemplate what will happen next.
We are in the middle of small-cap earnings season, which is always messy. Small-caps tend to have lumpy performance and they are unable to forecast future financial performance as well as their big-cap brothers. There are many more surprises and many more disappointments. Wednesday, some of the bigger names that were disappointing were Uber (UBER) , Shopify (SHOP) , Arm Holdings (ARM) , and Coupang (CPNG) .
There is plenty of chaos under the surface, but the Magnificent Seven stocks and the financial sector are helping to hold up the senior indexes. While there isn’t much upside momentum, there is underlying support for names like Meta (META) and Microsoft (MSFT) , which are helping the bullish cause.
The primary issue right now is whether economic conditions will be a positive or negative catalyst. Earnings season is mostly finished except for Nvidia undefined and some retailers, but the market is still trying to figure out the timing of an interest-rate cut. Bonds weakened again on Wednesday, and there will be weekly unemployment claims and consumer confidence to consider this week. Next week is the CPI report, which should produce a strong response in one way or another.
For now, we have a market that is pulling back slightly and consolidating recent gains while waiting for the next news trigger. There has been some deterioration in technical conditions, but support for the 50-day simple moving average is holding.
I’m dealing with quite a few small-cap earnings reports and will be looking for short-term opportunities, as news reports are issued.
At the time of publication, Rev Shark was long UBER.