Longer-term the market moves on fundamentals.  And, if we've known each other for even only a brief time, you likely know the next sentence:  The most basic of fundamentals is corporate earnings and the outlook for earnings.  

Per FactSet, corporate earnings are expected to increase by approximately 11% in 2024, and even more in 2025, based on Wall Street consensus expectations.  This is significant for the historical annual increase of corporate earnings is closer to 7%.  Corporate America is doing well.  

Shorter-term the market moves for any number of reasons - some logical and rational. Other times, emotions rule the day.  Yesterday, two significant data points were released - one bullish, one bearish.  Both are based upon fundamentals.  

On the bullish front, the quintessential company representing artificial intelligence (AI) had yet another blow away quarter.  Revenue and earnings grew at a very robust rate and even came in higher than expected.   This is the result of corporations continuing to spend more in the AI space.  This is very encouraging because it provides additional evidence of the initial stages of the next technological revolution.  

AI has the potential to transform the world - increasing productivity, and efficiencies.  Not only can AI change the way the world operates and our daily lives, but it can also impact corporate earnings which in turn should impact stock prices and thus the overall market.   This is why after the significant earnings announcement, it initially appeared the market would rally today.

The other release was that of the minutes from the last meeting of the Federal Reserve's FOMC (Federal Open Market Committee).  Although Chairman Powell has been fairly plain spoken regarding the Fed being data dependent, he has also indicated future rate hikes not being anticipated in the near future.  However, from the minutes, there were apparently discussions at the last FOMC meeting regarding the possibility of needing to hike interest rates further” should risks to inflation materialize in a way that such an action became appropriate.”   As today's trading day moved along, the concern over higher for longer and a potential tightening narrative seemed to be more concerning than the bullish AI update.

Investors do not want to be on the wrong side of the Fed.  The "don't fight the Fed" mantra is legitimate.  However, it seems the tech revolution is much more important in the longer-term than potential Fed actions in the short-term.  This is why we remain encouraged by longer-term equity market prospects and performance.  Time will tell.