The S&P 500 moved sideways last week, holding steady after a strong 10% rally over nine days—a positive sign of strength and stability. The index remains above its 50-day moving average, though it’s still facing some resistance at the 200-day mark. Meanwhile, the NASDAQ 100 has tried to break through its 200-day moving average three times in the past six sessions, and maybe the fourth time will do the trick.
Markets digest the recent tariff news, and investor sentiment seems more optimistic. While uncertainty has lingered, we’re beginning to see more clarity, and new leadership is starting to emerge. The once-dominant “Magnificent Seven” stocks face challenges, but the AI space is heating up again following DeepSeek’s surprise announcement on January 27.
We’re seeing strength in AI-related areas like construction, software, and electronics, fueled by institutional buying, as shown by price gains on higher-than-average volume. The Fed kept interest rates steady last week, and the market responded calmly—another encouraging sign. Trade deals and rate cuts are coming, and that could be the catalyst to break through overhead ceilings of resistance.
Technology remains the leader in expected earnings growth within the S&P 500, projected to rise 18.1% over the next year, compared to 12.8% for the overall index. About 72% of companies have reported this quarter, showing a 12.8% year-over-year increase in earnings. It’s the second straight quarter of double-digit growth and the seventh with annual gains. Plus, 76% have beaten earnings estimates, and 62% have topped revenue expectations—above the norm. Sectors like tech, health care, and consumer discretionary stand out. BTW, US companies are buying back stock at a record pace!
On the macro side, the US dollar and Treasury bonds continue to trend lower, supporting gold near record highs. Bitcoin is hovering around $100,000, showing strong speculative interest, often a sign of a healthy market risk appetite.
I’m about 66% invested and plan to increase my exposure as momentum builds.
Wishing you lots of grace and peace!
Watch List: AER, APH, BAP, CASH, CRS, CTAS, CVLT, FCFS, FICO, GEV, GWRE, LOAR, NFG, NWG, OSIS, PEN, PWR, TW, VIRT, WAY, WELL.
Just as I have loved you, you also are to love one another. John 13:34
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Dexter Lyons, Portfolio Manager
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