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08/28/2023 Market Strategy

  • John Stoltzfus
  • August 28, 2023

When Nothing New is Good News

Last Friday’s message from Fed Chair Jerome Powell suggested to us progress not perfection

Key Takeaways

  • With 97% (484 of 498) of the companies of the S&P 500 having reported Q2 earnings, the results now appear in-line with expectations from early July.
  • Earnings are off 6.1% from a year earlier, a bit better than the -6.4% contraction expected at the start of the season. Revenue growth has been minimal (up just 1%).
  • This week brings the nonfarm payroll survey with data on jobs added as well as wage growth and the unemployment rate, our first indicators of the economy’s health in August. Plus the ISM manufacturing indexes.
  • Last week’s economic data showed resilience in consumer sentiment and continued strong demand for the housing sector. 
financials abstract

This week greets stateside investors with a full calendar of key economic data across a broad array of metrics including manufacturing and services activity, home prices, job openings, consumer confidence, employment, wholesale and retail inventories, GDP growth, inflation, unemployment, job growth and personal spending.

The non-farm payroll number on Friday along with the unemployment rate and average hourly earnings report will likely capture attention most as investors ponder what it all means for the equity and bond markets as the calendar moves into the last month of the third quarter.

S&P 500 Q2 earnings season heads into the final stretch this week with just 14 companies left to report. This week will provide results from several widely followed stocks including companies in information technology, consumer staples and consumer discretionary.

Quotation from Aenean Pretium

In our view there were no material surprises for the market to react to on what the Fed Chair said last week

Last week’s action saw stocks bounce between gains and losses on a mix of earnings reports, economic data focused on what Fed Chair Powell would and did say about inflation; the economy and monetary policy at the end of the week from the Kansas City Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming.

In our view there were no material surprises for the market to react to on what the Fed Chair said last week. Essentially the Fed remains vigilant on bringing inflation down from current levels, acknowledges its degree of success thus far at reducing inflation from last year’s 40- year highs, while remaining data-dependent and prepared to raise its benchmark rate further should inflation remain sticky or not trend toward the Fed’s 2% target.

Markets were jostled over the course of the week and intraday last Friday by mixed viewpoints from bulls, bears and skeptics suggesting to us that patience will likely be key for investors to practice as uncertainty as to the when, where and how this inflation cycle ends.

The good news is the Fed has clearly made progress against inflation. The bad news is that after 11 rate hikes and one “skip” the Fed hasn’t curbed inflation enough to meet its 2% target or enough to quell the nagging concerns that remain as to how long the Fed will need to remain in tightening mode and subsequently how resilient the economy, the consumer, jobs, and corporate earnings can remain while the Fed tends to its mandate.

Stay the Course

We remain positive on stocks at this juncture recognizing that some volatility and market chop are likely to be expected as the process of arresting inflation remains a work in progress. Transitions in the process of exiting a crisis or a period of high inflation are never easy nor overnight achievements. Risks and opportunities we have found over the course of 40 years in the markets emerge with frequency at such times requiring diversification, patience and a sense of context

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John Stoltzfus


Chief Investment Strategist, Oppenheimer Asset Management Inc.

John is one of the most popular faces around Oppenheimer: our clients have come to rely on his market recaps for timely analysis and a confident viewpoint on the road forward. He frequently lends his expertise to CNBC, Bloomberg, Fox Business, and other notable networks.

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