Choppy start to Q2

  • Stocks pull back, jobs surprise to upside
  • Small caps slide, oil climbs, gold tops $2,300
  • This week: Inflation, Fed minutes, earnings kickoff

April got off to a volatile start, with the S&P 500’s (SPX) biggest down day since February resulting in just its fifth negative week since October, as traders pondered the significance of the latest jobs report and prepared for this week’s all-important inflation data.

A strong rally Thursday morning erased the SPX’s initial loss for the week, but a sharp sell-off in the final 90 minutes of trading turned the tide back in favor of the bears and left the index down more than 1%. And despite an energetic rebound on Friday after an expectedly strong monthly jobs report, the SPX still closed toward the lower end of its range of the past two weeks:

Chart 1: S&P 500 (SPX), 2/16/24–4/5/24. S&P 500 (SPX) price chart. Choppy week.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)

The headline: Stocks stumble before jobs report, bounce after.

The fine print: Last SPX’s 110.53-point range last Thursday was its most volatile day since February 1, 2023.

The number: 303,000, the number of new jobs the US economy added in March—the highest total since May 2023, and roughly 50% above estimates.

The scorecard: The Russell 2000 (RUT) small cap index took the biggest step back:

US stock index performance for week ending 4/5/24. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector returns: The strongest S&P 500 sectors last week were communication services (+1.6%), industrials (+1.4%), and tech (+1.4%). The weakest sectors were consumer staples (+0.2%), utilities (+0.4%), and real estate (+0.7%).

Stock movers: Canopy Growth (CGC) +30% to $10.89 on Wednesday, Cazoo (CZOO) +40% to $16.40 on Thursday. On the downside, Disc Medicine (IRON) -45% to $34.21 on Monday, PVH (PVH) -22% to $108.68 on Tuesday.

Futures: Gold prices topped $2,300 for the first time. June gold (GCM4) ended last week up more than $100 at a new record high of $2,345.40. After six up days in a row, May WTI crude oil (CLK4) closed Friday at a new contract high of $86.91, while Brent crude oil prices pushed above $90 last week. Week’s biggest gainers: May coffee (KCK4) +12.5%, April VIX (VXJ4) +11.9%. Week’s biggest decliners: April ether (ETHJ4) -7.4%, May oats (ZOK4) -7.2%.

Coming this week

In addition to inflation data (CPI and PPI), traders will get a look at the minutes from the Fed’s March policy meeting:

Monday: NY Fed Survey of Consumer Expectations 
Tuesday: NFIB Small Business Optimism Index
Wednesday: Consumer Price Index (CPI), wholesale inventories, FOMC minutes
Thursday: Producer Price Index (PPI)
Friday: Import Price Index, consumer sentiment (prelim)

Friday’s slate of bank earnings signals the start of another earnings season:

Tuesday: Albertson’s (ACI), PriceSmart (PSMT), Smart Global (SGH), WD-40 (WDFC)
Wednesday: Delta Air Lines (DAL)
Thursday: Fastenal (FAST), CarMax (KMX), Constellation Brands (STZ)
Friday: Blackrock (BLK), Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

On to earnings?

Last Wednesday, Fed Chair Jerome Powell said it was too early to know whether the past two months of rising inflation numbers were a “bump” or something more significant. A day later, Minneapolis Fed President Neel Kashkari questioned the need to cut rates at all if inflation continued to “move sideways.”1 Then, on Friday, the stock market rallied despite jobs data that didn’t do anything to improve the odds of a June rate cut.

Was this an indication, as Morgan Stanley analysts recently argued, that stock investors have moved past the Fed, inflation, and interest rates, and are focused on earnings growth?2 The market’s reaction to this week’s inflation data may provide some additional clarification—especially if that data comes in above estimates.


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1 Reuters. Fed's Kashkari says 2024 rate cuts under threat if inflation continues to stall. 4/4/24.
2 Finding the Equity Sweet Spot. 3/18/24.

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