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Did the Market Pullback Bottom Already?

Did the Market Pullback Bottom Already?

April 30, 2024

Last week the stock market had a strong week to the upside amidst choppy trading and rising bond yields. It’s possible the month-long market pullback could have bottomed, although some important events this week will test this theory.

It will be a pivotal week for several reasons, and not the least of which is the Federal Reserve meeting commencement on Wednesday. The path to 2% inflation has become murkier and the Fed will need to decide whether to stay their course or let investors know that it’s being altered. Any hint of talk that there may be another interest rate hike will likely spook investors, and lead to a continuation of the stock market pullback and a drop to lower lows.

First quarter earnings season is still in full gear with many big-name companies reporting this week, including Amazon and Apple. This week’s reports will likely solidify analyst thinking on what score to give this earnings season, which thus far has been very good. Friday is also the all-important jobs report which is just as impactful to Fed policy as inflation. The results of economic reports are always a bit wonky and questionable at the start of the year due to seasonal adjustments. This Friday’s report covers unemployment during April and the numbers should be more valid, while revisions to the first three months of the year should give better clarity as well.

If the pullback did in fact end on April 19th, it would have been a very mild one with a 5.9% pullback in the S&P 500 and relatively benign investor sentiment. Events this week have the potential to push the markets lower, possibly down to the previous all-time high of 4818.

Photograph by: Mario von Rotz on Unsplash

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