Stocks Closed Sharply Higher For The Week, 8 Weeks In A Row For The Nasdaq

Plus 5 Just-Added Strong Buys Stocks Closed Sharply Higher For The Week, 8 Weeks In A Row For The Nasdaq [Kevin Matras - EVP - Photo] Profit from the Pros By Kevin Matras Executive Vice President Stocks Closed Sharply Higher For The Week, 8 Weeks In A Row For The Nasdaq [Stocks Closed Sharply Higher For The Week, 8 Weeks In A Row For The Nasdaq] Stocks closed lower on Friday, but sharply higher for the week. Last Wednesday's FOMC announcement, even though they surprised some with their estimate that they could raise rates by 50 more basis points (25 more than the 25 that had been expected), confirmed that the Fed was closer to the end of their rate hike cycle than not. For one, they acknowledged that while inflation has come down, it's not coming down as much or as fast as they would like, hence the likelihood of additional rate cuts. While the core PCE (Personal Consumption Expenditures) index is down from last year's peak (currently at 4.7% vs. last year's high of 5.3%, which is still a ways away from the Fed's target of 2%), they upped their end-of-year inflation forecast to 3.9% vs. their previous forecast of 3.6%. Although, they expect to see inflation at 2.6% in 2024. But they don't expect to hit 2% until 2025. They also increased their estimates for the economy. They marked up their forecast for full-year 2023 GDP to 1% from their previous estimate of 0.4%. And they marked down their estimate for 2023 unemployment to 4.1% from their previous estimate of 4.5%. This underscores the resilience of the economy, and further dispels the notion that a recession is looming. And traders cheered the news. But the upside breakout that began several weeks ago was foreshadowed by the sudden moves from previous YTD laggards, i.e., the small-cap Russell 2000 index, the mid-cap S&P 400 index, and the equal-weighted S&P 500 index (ETF). Many have accused this year's rally of being driven mostly by big-tech companies. And indeed it was. The market-weighted S&P 500 has largely been powered by the top 10 biggest companies. And up until recently, the equal-weighted index had actually been down. But a few weeks ago, everything else seemed to finally come alive. The surge in small and mid-cap stocks showed the breadth of the rally was finally expanding. And that was confirmed when the equal-weighted S&P 500 index followed suit. All bullish signs. And traders wasted no time piling back into stocks. The markets were already moving up prior to the Fed's announcement. But it was clearly interpreted bullishly, and that just added fuel to the rally. And I'm expecting the gains to continue throughout the rest of the year. Especially with statistical trends in the market's favor. The 4-year Presidential Cycle shows that year 3 (that's 2023), is the best year of all 4 years. Since 1950, stocks have always gone up in the year after midterms, with an average 12-month forward return of 18.6%. So we are literally still in the first half of one of the most bullish periods for the market. Additionally, over the last 60 years, if a bear market in the S&P goes down by -25% or more (the S&P was down by -25.4% last year between their bull market high close and their bear market low close), stocks go up on average of 38% a year later (those stats encompass 9 bear markets, with 8 of those seeing stocks up the next And there's plenty of reason to believe we could see something like that again this year. So it looks like there's still plenty more upside to go. 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