Some stock market charts to consider as we look forward

This post was originally publihed onn

Stocks rallied again, with the S&P 500 climbing 2.7% last week. The index is now up 11.8% from its October 12 closing low of 3,577.03 and down 16.6% from its January 3, 2022 closing high of 4,796.56.

The past two weeks have come with loads of new data, and a lot of analysts returning from break published tons of fresh research.

Here are a few charts about the market that stood out:

The S&P 500 is off of its lows. (Source: Yahoo Finance)

Financial obligations have been manageable

“To date, higher interest rates have not negatively impacted margins,” Jonathan Golub, chief U.S. equity strategist at Credit Suisse, wrote in a January 4 note to clients.

To illustrate this, Golub share this chart of S&P 500 interest expenses as percentage of revenue.

For more on the implications of higher interest rates, read “There’s more to the story than ‘high interest rates are bad for stocks’ 🤨,“ “Business finances look great 💰,“ and “Why repaying $500 can be harder than repaying $1,000 🤔“

Companies are investing in their business

“Despite macro uncertainty, capex spending has remained strong, accelerating to +24% YoY in 3Q, driven by Energy and Communication Services,“ Savita Subramanian, head of U.S. equity strategy at BofA, observed on Friday.

BofA expects the U.S. economy to go into recession this year.

“Although capex is typically pro-cyclical, we see several reasons that capex will be more resilient during this recession than in the past, including persistent supply challenges, the need to spend on automation amid wage inflation/tight labor market, reshoring, underinvestment by corporates for decades, and the energy transition.“

For more on capex spending, read “9 reasons to be optimistic about the economy and markets 💪“ and “Three massive economic tailwinds I can’t stop thinking about 📈📈📈.“

Watch for stocks to decouple during earnings season

“We look for price dispersion to rise over the next ~6 weeks as it has done throughout prior earnings seasons,” Mike Wilson, chief U.S. equity…


Read More

Recommended For You

Leave a Reply

Your email address will not be published. Required fields are marked *