I hope everyone had a nice weekend!
Stocks are looking to rebound today after last week's AI-related selloff. Much of the volatility reflected growing scrutiny surrounding AI infrastructure financing, execution, and investment returns, even as underlying demand remains exceptionally strong.
Meanwhile, last week's CPI and PPI reports both came in hotter than expected, further complicating the inflation outlook. Interestingly, bond yields moved lower despite the inflation surprises. Markets also reduced expectations for an October Fed hike as concerns about financial conditions and economic growth increased.
Although it is still early in earnings season, approximately 80% of reporting companies have exceeded expectations, while roughly 56% have delivered positive revenue surprises. Meta, Tesla, Netflix, IBM, and Texas Instruments are among this week's key earnings catalysts.
I am particularly interested in whether buying activity continues to broaden beyond technology and into more value-oriented and defensive areas of the market. The consumer has remained largely resilient as we approach the crucial holiday shopping season, which should provide further insight into the strength of the broader economy.
All things considered, I remain optimistic and continue to view any near-term pockets of volatility as longer term buying opportunities.
Please continue to reach out with any questions or additional comments.
Attached is this week's Market Strategy Radar Screen Report from John Stoltzfus, Chief Investment Strategist at Oppenheimer Asset Management.
Have a great week!