U.S. stocks closed lower on Friday, 14th April 2023, but a strong afternoon rally helped mitigate the losses.
Earlier in the week, the market saw a boost from better-than-expected CPI and PPI data, which encouraged dip buyers to come back into the markets.
The trend continued on Friday, when JPMorgan, Citi Group, and Wells Fargo all reported better-than-expected results, giving the market some confidence that the banking crisis may be behind us.
Traders have now turned their focus on the Federal Reserve’s next move. According to the CME Fed watch tool, traders believe that the most likely scenario is a 25-basis point increase and many are anticipating that this will be the last of the Fed hikes.
On the other hand, U.S. Treasury yields rose on Friday, lifting the 10-year and 30-year rates to their biggest weekly gains in 2 months.
For the week, the Dow Jones jumped 1.2%, while the S&P 500 gained 0.8% and the Nasdaq Composite added 0.3%.
Here are the closing levels on Friday, 14th April 2023:
| Last | Change | %Change | |
| Dow Jones | 33,886.47. | -143.22. | -0.42% |
| S&P 500 | 4,137.64 | -8.58 | -0.21% |
| Nasdaq Comp | 12,123.47 | -42.80. | -0.35% |
| US 10Y | 3.51% | ||
| VIX | 17.07 | -0.73 | -4.1% |
The market has once again refused to give in to any selling.
Data or news that caused any selling has once again been met by the dip buying army.
This has really frustrated the shorts and sellers; however, buyers are beginning to wonder if the market is capable of going much higher.
Valuations are beginning to look stretched and with more and more calls for recession, earnings could be affected. Investors are still hanging on to the possibility of rate cuts at the latter part of the year, which will be tested soon enough as we head into the 2nd quarter of the year.
The market’s current pricing reflects this outlook, which has prevented any major selloffs in the face of higher interest rates.
As earning season kicks off, we could get more insight into where this market should be going.
Will it give fuel to the buyers and break out to new highs or will the pressure of lower forward guidance bring the sellers back in?
The market has been in a relatively tight range with the VIX at 17. This could mean low volatility is expected through the earnings release or possibly the calm before the storm.
Source: CBOE, Bloomberg.
This commentary is written by James Gomes.
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years.
Risk Disclosure
Trading in financial instruments involves high risks due to the fluctuation in the value and prices of the underlying financial instruments. Due to the adverse and unpredictable market movements, large losses exceeding the investor’s initial investment could incur within a short period of time. The past performance of a financial instrument is not an indication of its future performance. Investments in certain services should be made on margin or leverage, where relatively small movements in trading prices may have a disproportionately large impact on the client’s investment and the client should therefore be prepared to suffer significant losses when using such trading facilities.
Please make sure you read and fully understand the trading risks of the respective financial instrument before engaging in any transaction with Doo Prime’s trading platforms. You should seek independent professional advice if you do not understand any of the risks disclosed by us herein or any risk associated with the trade and investment of financial instruments. Please refer to Doo Prime’s Client Agreement and Risk Disclosure Statement to find out more.
[Disclaimer]
This information is addressed to the general public solely for information purposes and should not be taken as investment advice, recommendation, offer, or solicitation to buy or sell any financial instrument. The information displayed herein has been prepared without any reference or consideration to any particular recipient’s investment objectives or financial situation. Any references to the past performance of a financial instrument, index, or a packaged investment product shall not be taken as a reliable indicator of its future performance. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, make no representation or warranties to the information displayed and Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners and their respective employees, as well as managers, shall not be liable for any direct, indirect, special or consequential loss or damages incurred a result of any inaccuracies or incompleteness of the information provided. Doo Prime and its holding company, affiliates, subsidiaries, associated companies, partners, and their respective employees, as well as managers, shall not be liable for any direct, indirect, special, or consequential loss or damages incurred as a result of any direct or indirect trading risks, profit, or loss arising from any individual’s or client’s investment.
