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Are Markets All-In on a "Soft Landing"?

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Markets swung back late in the day from early afternoon doldrums to close near session highs across the board. Prolonged economic data demonstrating resilience in some areas and measured declines in others are giving oxygen to the “soft landing” narrative. The Dow was up +115 points on the day, +0.34%, the S&P 500 was +0.94%, the Nasdaq — now up more than +22% year to date — gained another +188 points, +1.51%, and the small-cap Russell 2000 reached +0.58%.

Earlier today, we saw Existing Homes Sales figures for April, which were slightly above expectations to 4.28 million seasonally adjusted annualized units, but, as expected, beneath the 4.43 million reported for the previous month. You can put this in the “measured declines” column. And Leading Economic Indicators, also for April, halved the previous month’s headline but still came in negative, at an as-expected -0.6%.

Applied Materials (AMAT - Free Report) posted beats on both top and bottom lines for its fiscal Q2 results reported after the close, with earnings of $2.00 per share outperforming the $1.84 expected (and $1.85 per share from a year ago) on sales of $6.63 billion, which easily surpassed the $6.40 billion in the Zacks consensus. Resilience in mature nodes and foundry businesses gained in the quarter, as did its Memory category, which other chipmakers found challenging in the quarter.

Ross Stores (ROST - Free Report) also beat expectations on its bottom line in its Q1 report out this afternoon, by 3 cents per share to $1.09, and nicely above the 97 cents per share posted in the year-ago quarter. Revenues in the quarter were flat with expectations to $4.49 billion, +3.73% year over year. Comps were +1%, but guidance for the current quarter is flat. The company cited prolonged inflation pressures, among other things.

We’re through with big economic data reports for the week, with Deere & Co. (DE - Free Report) and Foot Locker (FL - Free Report) putting up quarterly numbers before tomorrow’s open. Next week is light on data — PMI Manufacturing and Services, plus a big PCE support a week from tomorrow — but still heavy on Q1 earnings, albeit mostly of the smaller-cap type. Let’s see if these recent market gains are sustainable with a relative dearth of new market information.

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