Stock Markets Gain on Nvidia Earnings; Bonds Also Up

The Dow (+1.3%), NASDAQ (+1.4%) and S&P 500 (+1.7%) each posted moderate gains for the week.  Meanwhile taxable bonds and tax-free municipal bonds gained about 0.2%, as the 10-year Treasury yield fell 0.03% to finish the week at 4.26%.

In a holiday-shortened week, the stock markets started off slow until the blockbuster earnings report from the chip maker Nvidia were announced in what John Hancock Investments referred to as “the earnings report heard around the world”.  The stock markets rocketed, as that gave investors a greater willingness to take additional risk in stocks.  This overcame investors’ fears of the Fed keeping rates higher for longer … at least for now.

My favorite report, Leading Economic Indicators (LEIs) for January were also reported last week.  LEIs remained negative for the 20th consecutive month, dropping more than what was observed in December.  However, the Conference Board noted that for the first time in two years, 6 of the 10 LEIs were positive for the prior 6-month period.  Further, while negative LEIs have historically been accurate in “predicting” a forthcoming recession, the Conference Board changed its tone.  They are now saying that the index is no longer signaling a recession, but rather a Q2 and Q3 slowdown of GPD growth to nearly zero.

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^{The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.}