Category Archives: Market Commentary

General commentary about the financial markets

September Housing Market Update

The average rate on the 30-year mortgage has risen above 6.00% in response to the latest hike in the Fed Funds target rate.  Freddie Mac’s Primary Mortgage Market Survey pegged the average rate at 6.29% this week. The CME’s Fed … Continue reading

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22Q2 Housing Market Update

Despite an accelerating slide in housing sales and production following this year’s rise in mortgage rates, my homebuilder stock price index has performed in line with its benchmarks since April. At current prices, homebuilding stocks trade at less than four … Continue reading

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The Drivers of Large Cap Stock Performance in 2021

Estimated Returns by Sectors, Industry Groups and Industries Large cap stocks, as measured by the Lark Research Large Cap index (the “Index”) which currently mirrors the S&P 500, turned in another impressive performance in 2021.  The Index posted a price … Continue reading

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2021 Market Outlook – Part 2: S&P 500 Sector Analysis

2020 was of course dominated by the impact of the pandemic on the economy and specifically on the revenues and profits of each of the S&P 500 constituents.  There was a sharp stock market sell-off in March-April, followed by a … Continue reading

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The Employment Situation and Outlook – December 2020

Yesterday, the Bureau of Labor Statistics estimated that nonfarm payroll employment declined by 140,000 in December.  The estimate for November was increased by 135,000.  The level of employment for December was therefore virtually unchanged from the November report.

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Housing Market Update – February 2019

The outlook for housing (or more precisely, sentiment about the outlook for housing) has improved in recent weeks, primarily because of the decline in mortgage rates.  The average rate on the 30-year mortgage has fallen by 57 basis points (bp) … Continue reading

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Friday’s Drop in Unemployment: Less Than Meets The Eye?

The reaction to Friday’s labor market report was sharp and swift. Bond yields, especially on the long end of the yield curve rose and stocks sold off. The yield on the 10-year Treasury note ended the week at 3.23%, its … Continue reading

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Notes from the Inbox . . . August 24, 2018

Here are the noteworthy items that crossed my desk during the week ended August 24, 2018:

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A Possible Early Sign of a Market Rebound

Last week, stocks fell sharply. The S&P 500 ended the week down 5.16% in price. The Lark Research Homebuilder Stock Price Index fell 6.02%, underperforming the broader market.

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The Fed Keeps Interest Rates on Hold

At the conclusion of its two-day meeting on July 26, the FOMC kept the Fed Funds target rate unchanged.  While this was expected by the financial markets, I thought that the FOMC might still actually raise the target rate.  At … Continue reading

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The Market’s Mistaken View on Fed Rate Hikes

The consensus view of the financial markets suggests that the FOMC will next raise its target Fed Funds rate in December (by a quarter point).  Currently, the target range is 1.00%-1.25%. Fed Funds futures currently suggest (as of July 13) … Continue reading

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Growth vs. Value: The Story of the Market

There are many ways to slice and dice the market to gain insights into its recent performance, but perhaps the simplest and sometimes the most effective way is to look at growth vs. value.

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Market Update–April 30, 2017

The major equity averages closed out the month of April with respectable gains ranging from 1.1%-1.4%, with the exception of the Nasdaq Composite, which rallied 2.9%. Year-to-date, the major indexes are up 6.0%-6.5%, which translates into an annualized gain of … Continue reading

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Market Update: A Temporary Head Fake?

Since my last update (Feb. 26), the stock market has had its ups and downs, reflecting the push and pull of stronger economic data against higher interest rates and the ongoing political wrangling in Washington.

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Market Update: Risk-Off Stocks Back in the Lead

The stock market has advanced steadily through most of February. Many market commentators are calling it a melt-up because average daily price moves have been less than 1%. (In fact, the S&P 500 has not moved more than one percent … Continue reading

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Quiet Before the Storm?

Since volatility picked up in early September when Fed speakers began to talk more supportively of a Fed Funds rate hike, the market has descended over the past few weeks into a period of relative calm, with smaller daily changes … Continue reading

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Friday’s Sell Off Likely Ushers in New Bout of Volatility

Stocks sold off hard on Friday (9/9). The market plunged in the first hour of trading, fell steadily throughout the day and closed with a rush of selling in the final hour of trading. All told, the major market averages … Continue reading

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Market Update – July 17, 2016

The S&P 500 gained 1.49% for the week ended July 15, its third consecutive week of gains following the modest post-Brexit sell-off.   In total, the index has gained 6.1%, its best three-week showing since October 2015. Gainers last week were … Continue reading

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Momentum Fades, Risk Increases

After mounting an impressive turnaround rally which saw the S&P 500 rise 16.6% from its intraday low of 1810.10 on Feb. 11 to an intraday peak of 2111.05 on April 20, the stock market has recently given back some of … Continue reading

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Market Update – April 17, 2016

The S&P 500 closed the week ended April 15, 2016 at 2080.73, just a whisker away from the November 3, 2015 intraday high of 2116.48 and also its all-time high of 2134.28 at on May 21, 2015. In a little … Continue reading

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Market Update – March 27, 2016

The stock market lost ground last week after five consecutive weeks of gains. The selling began on Wednesday, following the attacks by Islamist extremists in Brussels. Yet, the losses were modest and orderly. Momentum had been waning in the latter … Continue reading

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Market Update – March 4, 2016

Major averages closed the week ended March 4 up 2%-3%. This marked the third consecutive week of gains. The S&P 500 gained 2.7%, but smaller stocks have led the way during this rebound. The S&P Mid-Cap 400 gained 4.4% and … Continue reading

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Market Update – Feb. 29, 2016

The broader stock market averages closed the week ended February 26 with gains of 1.5%-1.8%. Small caps rose 2.8%, a positive sign. This was the second consecutive week of gains, coming off of the Feb. 11 market low; but this … Continue reading

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Is A Market Bottom At Hand?

Ignoring, for the moment, the last three days of trading action, the stock market appears to be in the early stages of a correction. Last week, the S&P 500 broke below 1820, its October 2014 low, setting the next downside … Continue reading

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Weak Economic Growth Does Not Necessarily Point to Recession

So far, the stock market appears to be anticipating a slowdown in economic activity, but not necessarily a recession. Some think that the decline in stocks might actually cause an economic pullback (consistent with George Soros’s concept of reflexivity). Certainly, … Continue reading

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Stock Market Update – Jan. 25, 2016

After a disastrous start to the new year, the stock market finally seems to be getting its footing.  The S&P 500 gained 1.4% in the week ended January 22.  That follows a 2.2% drop in the previous week and a 6.0% … Continue reading

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Is the Federal Reserve Adding to Market Confusion?

The Federal Reserve Open Market Committee has taken the relative small (and symbolically huge) step of raising the target Fed Funds rate by one-quarter point. But its decision-making process and communications to financial markets both before and after the move … Continue reading

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Stocks Take A Tumble Again

Stocks got off to a terrible start in its first week of 2016 – the worst start to a year ever, according to Barron’s.  The S&P 500 closed the week down 6%.  Most major averages posted similar declines.  The S&P … Continue reading

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Despite Oil Plunge, Energy Stocks Still Above August Lows

Last week was a tough one for the stock market, the worst since the August mini-meltdown.  Most major averages fell more than 3.5%.  The S&P 500 was down 3.8%.  The NASDAQ Composite dropped 4.1%.  The Russell 2000 lost 5.1%.

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Reframing the Picture

Economic data and securities prices always provide a picture of investor sentiment regarding the outlook for the economy and financial markets.  That picture is never static, of course, and it often is wrong.  It changes in response to new developments … Continue reading

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The Fed Tries to Thread the Needle

Last week, the Federal Open Market Committee decided to leave the target Fed Funds rate unchanged at 0%-0.25%. This was consistent with the views expressed in the pricing of Fed Funds futures, but it was still a disappointment to those … Continue reading

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Ready for Another Dive?

It really looks too easy. Even though the S&P 500 is up 4.9% from its August 25 low, market sentiment has become decidedly negative. That the market is headed for a retest of its October 15 low is fast becoming … Continue reading

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After Last Week’s Sell-Off, A Market Correction Is More Clearly Underway

Stock markets around the world got clobbered last week. The U.S. was down 5%-6%. Europe fell 5%-8%. China and nearby countries also dropped 5%-8%. Latin America was mixed, but still down 1%-8%.

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Good Opportunities in Income-Producing Stocks

For many investors, the U.S. economy’s gain of 215,000 jobs in July “sealed the deal” for a Fed Funds rate hike in September. A 25 basis point rate hike is now more likely, according to the futures market. The current … Continue reading

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Commodities, China Probably Won’t Break The Market’s Back

After today’s open, it is obvious that the market is retesting its early July lows.  Talk about whiplash!  The market went straight up in eight trading sessions, to an intraday high of 2132.82 (on the S&P 500), above the previous … Continue reading

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