Daily Market Update 1/18/24

On January 18th, 2024, the mixed market reaffirmed the market volatility and uncertainty. For example, the S&P 500 delivered a choppy performance. Tech initially powered gains, such as Apple's 3.2% jump and TSMC’s 9.79%, aiming for 4,800 by midday. Optimism surrounding AI fueled the climb. However, profit-taking and Fed uncertainty pulled the rug, causing a gradual slide. A late rally salvaged a modest 0.07% gain, but the day's chart displayed a tug-of-war between bullish and bearish forces.

Despite inflation seemingly under control, the timing of a potential rate cut sparks debate. Given a recent jobless claims data 187,000, lower than both the forecast (207,000) and the previous week's revised data (203,000). This marks the lowest level since September 24, 2022. This data continues to highlight great job market and enhance consumers resiliency.

My assessment indicates the FED will not cut rates until June 11-12 to secure inflation control. This stance acknowledges the risk of celebrating too early is more serious compared to the potential of triggering a mild recession. Hawkish signals from Powell are expected in upcoming Fed meetings, reinforcing the wait-and-see approach.

Adding to the market's complexity is the concerning imbalance of seven top stocks comprise a hefty 32% of the index, while small caps struggle in undervalued territory. This concentration raises systemic risk concerns and complicates future market predictions.

In summary, January 18th wasn't a smooth day for the S&P 500. Tech gains collided with Fed worries and market imbalance, leaving investors navigating uncertain waters.

Given the market not yet violated an oversold territory, the market is likely to pull back a little longer. Many small cap stocks officially did a full round trip and gave up all the gains from previous rally. While this level of volatility spikes fears amongst retail investors, it present great opportunities to those can stand it, urging for the need to swing a fat pitch when high quality companies present a great entry price.


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