Stocks Aren’t Going Down. Why?

If you told me at the beginning of march that the following would happen:

Silicon Valley Bank fails. So do Silvergate and Signature. Another, First Republic, is also on the ropes. The fed, treasury, and FDIC have to work together to prevent a run on regional banks. And then a week later, the fed would still hike by 25 basis points.

Banks fail, fed hikes. If I had that information beforehand, I would have guessed the stock market would be down more than 10% on the month.

While regional banks are getting destroyed, down nearly 30% in March, the S&P 500 is up 1%, and the Nasdaq-100 is up a whopping 7%. I gotta be honest. I don’t get it.

The fed hiked yesterday. It was unanimous. They took rate cuts off the table and indicated that their fight with inflation is not over. Stocks understandably did not react well to Powell’s words and followed the typical post-fed playbook of bouncing and then puking into the close.

As I type, the S&P 500 is up nearly 2% on the day. I hesitate to give too much credence to short-term market gyrations, a lot of this is just noise, but getting back to what I wrote earlier, why aren’t stocks going down?

It’s hard to make a fundamental bull case for the stock market right now. Does anybody think the economy will accelerate over the next couple of quarters? Does anybody think that companies will grow their earnings per share through the rest of the year?

It’s also hard to make a bull case on valuations. Whatever your preferred metric, stocks aren’t cheap.

The only thing I can think of that’s holding this market up is that everybody agrees that things are looking risky right now. And maybe that’s enough to de-risk stocks. At least for now.

When everyone expects the market to do one thing and it does something else, I think it’s important to be openminded to the idea that maybe the market knows something that we don’t.

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.