Stocks closed at record highs last week, with the S&P 500 gaining 0.5% and the Nasdaq Composite rising by 3.5%. The market outlook for the coming weeks is positive, with a mix of economic data and earnings reports scheduled. Two key stories emerged over the weekend, including the merger of Paramount Global and Skydance Media, as well as Boeing’s guilty plea related to the 737 MAX crashes, resulting in hefty fines and potential impacts on future government contracts.
Looking ahead, Chairman Powell will testify before Congress, the latest Consumer Price Index (CPI) will be released, and earnings season will kick off with companies like Delta Airlines and PepsiCo reporting. Expectations for earnings growth are high, with estimates of 8.8% growth for the second quarter. However, the market’s current valuations are considered lofty, with the S&P 500 trading at 21.4 times its twelve-month forward-looking earnings, above its historical average. Failure to meet earnings expectations could lead to a market correction.
The market gains this year have been driven by a few key stocks, with significant year-to-date returns seen in companies like Meta Platforms, Amazon, Microsoft, and Apple. Tesla, while relatively flat for the year, saw a 27% gain last week. Investors looking to protect their gains may consider options strategies like covered calls or collars. Volatility in the market remains subdued, but as we approach earnings season, some volatility may return. Shares of Intel are indicated to be higher by 3% premarket, without any specific news driving the increase.
Overall, investors are advised to stick with their long-term objectives and investing plans. The content provided by tastytrade, Inc. is for educational purposes only and not intended as trading or investment advice. The market’s reactions to upcoming events, including earnings reports and economic data, will be closely monitored for any potential impacts on stock prices. Stay tuned for further updates on market developments and company performances as the week progresses.
