Does A Chiefs Win Mean A Bear Market?

Key Takeaways

• S&P 500 Settles Above 5000
• Technology Stocks Continue Leading The Way
• Consumer Price Index Due Out Tuesday

Markets closed higher last week with the S&P 500 gaining 0.6% on Friday and settling above 5,000 for the first time ever. That put gains for the week at 1.4%. Meantime, the Nasdaq Composite closed higher by 1.2% on Friday and is now up 6.5% for the year. Both indices have been up 14 of the last 15 weeks. That's the best run for the S&P 500 since March of 1972 and for the Nasdaq since the 1990s according to the Wall Street Journal.

The story stocks have been and continues to be technology. Friday's market gains were largely driven by the usual suspects. Applied Materials AMAT was up 6.9%. Nvidia gained 3.6%. Both Google GOOG parent Alphabet and Amazon AMZN tacked on 2%, while Microsoft MSFT moved higher by 1.6%.

While last week had a number of companies reporting earnings, it was light on economic data. This week will see a continuation of earnings, but we will also get some big economic reports as well. On Tuesday, the latest Consumer Price Index (CPI) is due out. Economists are expecting a month-over-month increase of 0.2% and year-over-year increase of 3%. Core CORE CPI, which removes volatile food and energy prices, is expected to have increased 0.3% month-over-month and 3.8% year-over-year. Then later in the week, Retail Sales are due out along with the Producer Price Index.

While the market is climbing higher on expectations for strong earnings growth and lower interest rates, the bond market has seen some weakness of late. Yields on the 10-year note hit a low of 3.78% back in December but have been climbing since. On Friday, the yield settled at 4.19% but in premarket is down slightly at 4.15%.

Rates have been rising since the Fed threw cold water on the idea of an interest rate cut in March. Markets were predicting a greater than 80% chance of a cut at the next Federal Reserve Open Market Committee (FOMC) meeting, but those probabilities have since fallen to just under 16%. Looking out to May, there is a 66% chance rates will be cut at that FOMC meeting. Part of the reason for the Fed's hesitancy is due to continuing strong economic growth. But another potential concern could be a return of accelerated inflation. Oil prices closed higher for five consecutive days last week, closing on Friday at $76.60. In premarket, oil is down a little over 1%. This is a commodity I'm closely watching because if any commodity can quickly cause inflationary pressure, it's oil.

Despite Friday's close above 5,000 in the S&P 500, not many stocks made new highs. In fact, no S&P 500 stocks made a new high Friday; however, eight stocks on the Nasdaq Composite did hit all-time highs. Neither index saw any stocks hitting new lows according to MarketWatch.

Looking forward to this week, aside from the economic data reports mentioned above, it'll be another heavy week for earnings reports. On Thursday, Deere is scheduled to report before the market open. Applied Materials, Coinbase and DraftKings will all report after the close. While these names are well known names, I don't believe any of them have the ability to move the market like some of the bigger names that have already reported.

Finally, if you want to buy into superstition, there's a belief that when AFC teams win the Super Bowl, markets struggle. However, before anyone puts too much faith in that idea, I would remind you that the Chiefs won the Super Bowl last year and statistically, the AFC down, NFC up narrative does not have any actual statistical significance over time. As always, I would stick with your long-term investing plans and objectives.

tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.

By JJ Kinahan, Senior Contributor