(26 February 2024) Stocks rebounded last week as investors piled into AI-related stocks after the Nvidia earnings report. The S&P 500 added more than 1% to a new all-time high of 5088 while the Nasdaq-100 also finished higher at 17,937. This bullish outcome was unexpected as I thought we might have seen more downside on the Venus-Mars conjunction. While we did see some selling in the first half of the week, it was quite modest and not enough to offset the post-NVDA earnings rally.
So the rally continues. The optimism surrounding AI is the latest driver of the soft or no landing scenario. Investors have become so enthusiastic about the prospects for continued growth that the FedWatch tool is pricing in only three rate cuts (75 basis points) in 2024. While markets are now factoring in the possibility of persistently higher inflation, this will be less likely to create problems as long as economic expansion continues. Last week’s jobless claims of 201K would seem to support that view as they have yet to show any deterioration in the labor market. The reaction of the bond market was fairly muted as the 10-year yield fell four basis points on the week to 4.26%. While this is still slightly above the important technical level of 4.25%, this elevated yield may be seen as more benign given the economic boost that is expected from AI. However, if yields resume their rise on renewed inflation pressures, stocks could still be negatively impacted.
The planetary outlook is uncertain. Last week’s rally nullified the notion that the separating Jupiter-Saturn alignment might coincide with some near term downside. While Jupiter may well be weakening and thus providing less bullish sentiment for the market, it has only correlated with a slowing of upward momentum rather than a larger pullback or correction. And even if some short term bearish transits involving Saturn or Mars generate some down days in the near term, it is unclear if there is enough purely bearish energy to bring about some significant selling. It is possible that bears may have to wait a bit longer, such as until the next Saturn aspects with slower-moving planets in early and mid-March. At that time, Saturn is due to form minor alignments with Rahu (36 degrees), Chiron (36 degrees) and Pluto (40 degrees). While none of these aspects are full-strength negative influences, they are nonetheless potentially bearish and could be sufficient to disrupt the current melt-up rally…
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Photo Credit: Will Buckner
