Sevens Report: Increased Stock Volatility & Earnings Impact on 2024 Market

Summary

  • Sevens Report Research predicts increased volatility will significantly impact the markets in 2024.
  • Last week’s rise in volatility was prompted by poor earnings reports from prominent companies, potentially hinting at what may drive early 2024 markets.
  • The big Wednesday drop in stocks is considered an effect of the ongoing six-week, 15%+ rally.
  • The firm suggests that optimism might have been overpriced into the markets, leaving them vulnerable to any setback.
  • The absence of the ‘Wall of Worry’ and investor complacency are crucial factors Sevens Report Research advises watching, as 2024 begins.

Increased Market Volatility: A Major Theme for 2024

Sevens Report Research suggests that the stock market’s price movements last week could hold potential insights for market trajectory in 2024, specifically predicting an uptick in volatility.

“Share prices saw a broad increase last week but experienced the most substantial single-day dip in several weeks on Wednesday. The cause of this heightened volatility offers clues about factors that might influence market movement in early 2024,” says the research firm.

Factors Influencing Recent Stock Market Drops

Sevens Report Research points to disappointing earnings reports and the extended six-week, 15%+ rally as major contributors to the recent stock market dip.

The firm cites companies like FedEx, Winnebago, General Mills, and Nike as providing less than stellar earnings. It notes that while a slowdown in inflation and a soft landing might be good for Fed policy, they could pose considerable challenges for corporate America and hamper earnings outlook.

General Market Outlook

The increase in stocks’ Wednesday drop and the overall surge in volatility can be attributed to the markets having already factored in most of the positive news. This makes them susceptible to adverse reactions from any disappointment,” added the firm.

Typically, price movements in the weeks leading up to and following Christmas can be chalked down to yearly fluctuations. However, this may not be the case in the context of the current year, the firm adds.

Sevens Report Research also highlighted two issues demanding attention: 1) subpar earnings and 2) the absence of a ‘Wall of Worry’. The research firm maintains a positive outlook on market fundamentals as we step into 2024 but warns of potential market complacency.

The insights provided by Sevens Report Research are expected to influence forex trading and other asset classes as traders adjust their strategies to account for predicted volatility and potential disappointments in corporate earnings.

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