Markets Rally on Hopes for Fed Pause, Earnings Have Been Mixed

Key Takeaways

• Stocks rallied strongly. Rates and the dollar rolled over. The S&P 500 closed at 3,752.75 and the VIX closed at $29.69.
• Earnings season so far has been better than expected despite some misses. Idiosyncratic risk is rising, and concern is growing that the Fed may be overtightening. Hopes for a pause in hikes drove today’s rally.
• We discuss the issues facing markets: persistent negative sentiment helps the bull argument, while declining earnings expectations make it harder for the market to reach new highs, bolstering bearish arguments.