After receding last week, the tide rolled in favor of the S&P 500 (Index: SPX). The index rose to 4450.38, up 2.4% from the previous week's close.

Since the end of 2022, the index has increased by 15.9%. The index would have to rise another 7.8% however to reach its previous record peak of 4,796.56, which was recorded at the beginning of 2022.

The rising tide that lifted stock prices during the final week of the second quarter of 2023 emanated from the banking sector. With all 23 major banks in the U.S. passing the Federal Reserve's latest stress tests on their capital level, several went on to announce significant dividend increases before the end of the week.

In the latest update for the dividend futures-based model's alternative futures chart, the news was sufficient to move the trajectory of the index back toward the middle of the redzone forecast range.

We'll be advancing the alternative futures chart to look forward through the end of the third quarter of 2023 in the next edition of the S&P 500 chaos series. When we do, it will show the current redzone forecast range extending for just a few weeks more, before we might return the dividend futures-based model's regular projections, without having to compensate for the "echoes" of past volatility.

Unless something changes between now and next week, our initial working assumption is that investors are fully focusing their forward looking attention upon the current quarter of 2023-Q3. How long they might continue to do that will be primary question of interest in the weeks ahead.

Until then, let's look back at the week that was for our summary of its market-moving headlines.

Monday, 26 June 2023

• Signs and portents for the U.S. economy:
  • Oil prices inch higher after political turmoil in Russia
  • US core capital goods orders beat expectations; shipments rise modestly
• Fed minions claim they're serious about fighting inflation:
  • Fed's Williams: Restoring price stability is critical goal right now
• Bigger trouble, stimulus developing in China
  • S&P cuts China GDP forecast as calls for stimulus intensify
  • China must act fast to bolster recovery, says senior economic official
• BOJ minions thinking they may rethink never-ending stimulus:
  • BOJ member called for early tweak to YCC, yen worries resurface
    • Japan's top currency diplomat escalates warning against weak yen
• Eurozone sees signs of improvement but forecast remains gloomy:
  • German recession to end in Q2 with slight GDP rise - Bundesbank
  • Sharp slowdown in growth of bank lending for euro zone and Germany forecast
  • Drop in German business morale points to longer recession
• Wall Street slips as investors eye Russia, Fed hikes, quarter-end

Tuesday, 27 June 2023

• Signs and portents for the U.S. economy:
  • Oil prices drop over 2% on interest rate hike worries
• Bigger trouble, stimulus developing in China:
  • China Economic Recovery Slow Amid Cleaner Pollution Air Quality Indicator
  • China will take steps to boost demand, accelerate green transition - Premier Li
• JapanGov minions starting to really worry about falling currency:
  • Japan finance officials step up warning against yen weakening
  • Japan's toolkit to combat sharp yen declines
• ECB minions fear lingering inflation, excited for more rate hikes, and think they should maybe stop Eurozone banks from doing business in Russia:
  • ECB faces new phase of lingering inflation, says Lagarde
  • ECB's Kazaks sees rate hikes past July even as economy softens
  • ECB's Enria wants euro zone banks out of Russia faster
• Wall Street closes higher as upbeat economic data allays slowdown fears
  • Companies' derivative bets to save on US debt costs turn riskier

Wednesday, 28 June 2023

• Signs and portents for the U.S. economy:
  • All 23 banks pass Federal Reserve's stress test on capital levels
    • Explainer-How does the Fed stress test US banks?
  • More policy tightening coming from ECB, Fed, BOE, central bank heads say
• Fed minions thinking about resuming rate hikes:
  • Fed's Powell does not rule out rate rise at coming meetings
• Bigger trouble developing in China:
  • China's industrial profits tumble, deepening economic gloom
• Bigger trouble developing in… Canada:
  • Recession bets rise in Canada as sticky inflation points to higher rates
• BOJ minions suggest they may end never-ending stimulus if inflation continues:
  • BOJ's Ueda: See good reason to shift policy if inflation re-accelerates into 2024
• Eurozone minions thinking about tightening fiscal policy to fight inflation; ECB minions getting results they want but draw criticism, still excited to hike rates but are thinking about a pause:
  • Euro zone should tighten fiscal policy in 2024 to curb inflation -EFB
  • Euro zone lending takes another hit as rate hikes bite
    • Italy rounds on "simplistic" ECB over rate hikes
  • ECB's Centeno sees monetary policy pausing soon
  • ECB's Vasle: biased toward rate hike beyond July
• Nasdaq, S&P, Dow end mixed as Powell comments offset boost from growth stocks

Thursday, 29 June 2023

• Signs and portents for the U.S. economy:
  • Oil settles higher, trade choppy as tight supply vie with rate hike fear
  • U.S. GDP growth revised up to 2.0% in third estimate, exceeding consensus
  • US weekly jobless claims post biggest drop in 20 months as economy shows stamina
  • US yield curve inversions deepen as Fed signals higher rates
• Fed minions say they'll resume hiking rates if inflation moves in wrong direction, are watching out for more bank failures:
  • Fed's Powell signals fresh US rate hikes ahead
    • Fed's Powell: Most US policymakers see two or more rate hikes ahead
    • Fed's Bostic says rates will probably rise if inflation moves from target
  • Fed's Powell: we are still monitoring the banks' situation very carefully
• Bigger trouble, stimulus developing in China:
  • China's factory activity seen contracting for third month in June: Reuters poll
    • Factbox-Policy measures China's central bank could use to stem yuan weakness
  • China to take measures to promote household consumption- state media
• Bigger trouble developing in… Canada:
  • Recession bets rise in Canada as sticky inflation points to higher rates
• JapanGov minions really worried about yen falling more:
  • Japan finance minister declines to rule out any options on weak yen
  • Explainer-What would Japanese intervention to boost the weak yen look like?
• ECB minions not getting other results they want:
  • Inflation up in German states, pointing to national rise
• Dow, S&P gain with bank rally countering rate worries
  • US bank stocks rise as lenders shrug off turmoil to ace Fed health checks

Friday, 30 June 2023

• Signs and portents for the U.S. economy:
  • Oil settles higher but posts fourth straight quarterly decline
  • US consumer spending hits speed bump; inflation picture mixed
  • Biden's student loan defeat adds to headwinds for US economy
    • Student loan ruling may be windfall for US deficit reduction
• Fed minions think money supply is tighter than during Great Recession, thinking about hiking rates more:
  • Fed paper: Financial conditions tightest since crisis over a decade ago
  • Fed trying to figure out if rates are high enough: Goolsbee
    • Explainer: The Fed's rate policy path, and what the data says
• Bigger trouble, targeted stimulus developing in China:
  • China's factory, service sectors stumble as economic malaise broadens
  • China central bank to keep policy 'precise, forceful' amid faltering recovery
    • China raises relending, rediscounting quotas for farm sector, small firms by $27.5 billion
• BOJ minions getting inflation they wanted, cost may be end of minion-beloved never-ending stimulus:
  • Tokyo inflation points to broadening price pressure, tests dovish BOJ stance
• ECB minions worry about sticky inflation, even though Eurozone inflation falls:
  • Sticky inflation complicating ECB rate path - Makhlouf
  • Euro zone inflation falls again in June as energy prices tumble
• Wall St rallies; Nasdaq hits 40-yr milestone, Apple scales $3 trillion

The CME Group's FedWatch Tool continues to project the Federal Reserve will hike the Federal Funds Rate by just a quarter point to a target range of 5.25-5.50% when it meets on 26 July (2023-Q3). After that, the FedWatch Tool anticipates the Fed's series of rate hikes that began in March 2022 will be done, with no changes until early 2024. The FedWatch Tool indicates investors expect the Fed will initiate a series of quarter point rate cuts at six-to-twelve-week intervals starting in March 2024.

The Atlanta Fed's GDPNow tool estimate of the real GDP growth rate for current quarter of 2023-Q2 increased to +2.2% from the +1.9% growth rate forecast a week earlier.

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