The stock market didn’t experience much up or down price action this week. The S&P 500 closed at 4,137 last Friday, then closed at 4,133 this Friday. There was not much volatility in daily price action as well with the major indices languishing along, moving mostly sideways.
Investors were playing a waiting game ahead of a big batch of earnings results next week that will feature reports from some mega cap stocks, including Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), and Meta Platforms (META). These reports will follow disappointing Q1 results from Tesla (TSLA), which plunged nearly 10.0% on Thursday.
Meanwhile, Dow component Procter & Gamble (PG) rose 3.5% on Friday as investors digested its pleasing fiscal Q3 results and affirmation of its FY23 EPS outlook.
Bank stocks were a pocket of weakness this week following earnings reports from some regional banks, including Zions Bancorporation (ZION), Truist Financial (TFC), and Western Alliance Bancorp (WAL). Despite regional bank weakness, the S&P 500 financial sector was among the top performers with a 1.0% gain.
Other top performing sectors include real estate (+1.6%), consumer staples (+1.7%), and utilities (+1.1%). The communication services (-3.1%) and energy (-2.5%) sectors were the worst performers by a wide margin.
Market participants were also reacting to a slate of weak economic data, which contributed to the hesitant mindset due to a sense that slower growth will put pressure on future earnings. Data releases this week featured the highest continuing jobless claims level since November 27, 2021, the weakest reading for the Philadelphia Fed Index (-31.3) since May 2020, the weakest level for the U.S. Leading Economic Index since November 2020, and a 22% year-over-year decline in existing home sales in March.
The market continues to contend with the notion that the Fed will keep rates higher for longer. Philadelphia Fed President Harker (FOMC voter) said the Fed is going to need to do more to get inflation back down to target, according to Reuters. This followed New York Fed President Williams (FOMC voter) signaling support for another rate hike at the May FOMC meeting and Cleveland Fed President Mester’s remarks, according to CNBC, that policy needs to move somewhat further into tightening territory with the fed funds rate above 5.00%.
Earlier in the week, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there “for quite some time.”
This commentary from Fed officials contrasts the fed funds futures market, which is pricing in two rate cuts before the end of the year, according to the CME FedWatch Tool.
Oil prices declined this week, reflecting slowdown concerns. WTI crude oil futures fell 5.5% to $77.86/bbl. Natural gas futures rose 5.0% to $2.22/mmbtu.
The 2-yr Treasury note yield rose six basis points this week to 4.16% and the 10-yr note yield rose five basis points to 3.57%.
Below are truncated summaries of daily action:
Monday:
The stock market spent most of the session oscillating in a narrow range that included modest losses for the Dow, Nasdaq, and S&P 500. Investors were lacking conviction ahead of a slate of earnings news this week. Earnings results so far have been better than expected/feared, which helped limit selling interest, but valuation concerns kept the market from moving noticeably higher.
The market was able to log modest gains, though, thanks to a late afternoon rebound effort. The upside move coincided with a CNN reporter tweeting that House Speaker McCarthy said he thinks he has the 218 votes needed in the House to raise the debt ceiling. The sentiment shift may have been overdone, however, when considering that House Speaker McCarthy told CNBC earlier that a “no strings attached” debt ceiling increase will not pass the House. A proposal with strings attached (e.g., spending cuts in exchange for raising the debt ceiling) is unlikely to pass the Senate.
Still, the major indices all finished at their best levels of the day, leaving the S&P 500 just above 4,150. Even semiconductor equipment makers, which had been a notable pocket of weakness, came along for the afternoon rebound. The PHLX Semiconductor Index (SOX) was down as much as 1.5%, but closed with a modest 0.1% loss.
Weakness in the SOX was stemming from a Bloomberg report that Taiwan Semiconductor Manufacturing Co. (TSM) may soon announce a cut in its FY23 capex budget to $28-32 billion from $32-36 billion.
Treasuries settled with losses across the curve as the specter of the Fed raising rates again in May and then not pivoting to a rate-cut cycle anytime soon, along with a stronger-than-expected New York Empire State Manufacturing Survey for April, prompted some selling interest.
Reviewing Monday’s economic data:
- April Empire State Manufacturing 10.8 (Briefing.com consensus -19.0); Prior -24.6
- April NAHB Housing Market Index 45 (Briefing.com consensus 45); Prior 44
Tuesday:
Tuesday’s session was decidedly mixed under the index surface. The main indices had a lackluster showing, spending most of the day trading right around their flat lines. Investors were reacting to a slate of earnings news, some positive economic data, and commentary from a few Fed officials.
Briefly, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there “for quite some time.”
Following their better-than-expected Q1 earnings, Bank of of America (BAC) and Lockheed Martin (LMT) were among the more influential winners on Tuesday. BAC, which was down as much as 1.9% at one point, helped drive a 0.3% gain in the S&P 500 financial sector and LMT helped propel the industrials sector (+0.5%) to the top of the sector leaderboard.
Meanwhile, Dow components Johnson & Johnson (JNJ) and Goldman Sachs (GS) registered outsized losses following their earnings reports. Both companies reported better-than-expected Q1 earnings, but GS came up shy with its revenue.
Bank stocks in general were weak as evidenced by the 1.3% decline in the SPDR Bank ETF (KBE) and the 2.2% decline in the SPDR Regional Bank ETF (KRE). Regional bank losses also weighed on the Russell 2000, which closed with a 0.4% loss.
Notably, homebuilders were a pocket of strength after this morning’s better-than-expected housing starts data from March, which was accented with welcome gains in both starts and permits for single family units. The SPDR Homebuilder ETF (XHB) was up 1.7% and the iShares U.S. Home Construction ETF (ITB) rose 2.3%.
Reviewing Tuesday’s economic data:
- Total housing starts might have declined 0.8% month to a seasonally adjusted annual rate of 1.420 million, but that was due to a decline in multi-unit starts. Single-unit starts were up 2.7% month-over-month to 861,000. Building permits, meanwhile, declined 8.8% month-over-month, driven by a 24.3% decline in permits for 5 units or more, whereas single-family permits increased 4.1% month-over-month to 818,000.
- The key takeaway from the report is the growth seen in single-family starts and single-family permits — a leading indicator — which is needed given the limited supply of existing homes for sale.
Wednesday:
Following a slate of earnings news since Tuesday’s close, the stock market had a lackluster showing. Major indices were confined to narrow trading ranges, registering only modest gains or losses throughout the session. The sideways price action was a reflection of a wait-and-see mindset ahead of earnings reports from most mega cap stocks next week and Tesla (TSLA) after Wednesday’s close.
The market had more of a negative bias initially, but several mega cap stocks recovered from early weakness and boosted index performance. Ultimately, the main indices closed off their lows of the day. Apple (AAPL), Amazon.com (AMZN), and NVIDIA (NVDA) were among the most influential winners. The Vanguard Mega Gap Growth ETF (MGK) rose 0.1% while the Invesco S&P 500 Equal Weight ETF (RSP), the market-cap weighted S&P 500, and the Nasdaq Composite all finished the session flat.
Outsized moves were mostly reserved for stocks with specific catalysts. Intuitive Surgical (ISRG) and Western Alliance Bancorp (WAL) were some of the best performers following their pleasing quarterly results. The latter fueled some buying interest in bank stocks. The SPDR S&P Bank ETF (KBE) rose 3.1% and the S&P Regional Bank ETF (KRE) was up 3.9% at Wednesday’s close.
Also, Morgan Stanley (MS) closed with a modest gain, rebounding from an opening 3.7% decline following its earnings results.
Treasury yields rose Wednesday, which acted as a headwind for equities. Price action in the bond market was a reflection of concerns about Fed policy. Some persistently high core inflation data for the eurozone and UK in March also contributed to selling interest.
Reviewing Wednesday’s economic data:
- Weekly MBA Mortgage Application Index fell 8.8% with purchase applications plunging 10% and refinance applications declining 6.0%
- Weekly EIA Crude Oil Inventories showed a draw of 4.58 million barrels following last week’s build of 0.597 million barrels
Thursday:
The stock market had a mostly negative disposition, digesting a slate of weak economic data and disappointing earnings results from Tesla (TSLA). Bank stocks were also a big drag on the broader market Thursday following several earnings misses from regional banks.
Despite Tesla’s sizable decline and other headwinds, index level performance was fairly resilient until mid-afternoon. Some relative strength from other mega cap names helped spur a rebound effort from openeing declines for the major indices, which traded right around their flat lines before selling picked up around 2:00 p.m. ET. The afternoon pullback looked technical in nature after the S&P 500 failed to break above the 4,150 level, hitting 4,148 at its high of the day.
Bank stocks were a notable pocket of weakness for the entire session. This followed relatively disappointing earnings reports from several regional banks, such as Zions Bancorporation (ZION) and Truist Financial (TFC). The SPDR Regional Bank ETF (KRE) fell 1.9% and the SPDR Bank ETF (KBE) decline 1.7%.
There were some big outperformers Thursday, however. Chief among them were the homebuilders following a positive response to D.R. Horton’s (DHI) impressive quarterly results and outlook. This fueled buying interest in other homebuilders as evidenced by the 1.7% gain in the iShares U.S. Home Construction ETF (ITB) and a 0.7% gain in the SPDR S&P Homebuilder ETF (XHB).
Reviewing Thursday’s economic data:
- Initial jobless claims for the week ending April 15 increased by 5,000 to 245,000 while continuing jobless claims for the week ending April 8 increased by 61,000 to 1.865 million.
- The key takeaway from the report is that continuing jobless claims are at their highest level since November 27, 2021, suggesting it is becoming more challenging to find new employment after a layoff.
- The April Philadelphia Fed Index slumped to -31.3 from -23.2 in March. That is the eighth straight reading in negative territory for this manufacturing survey and the lowest reading since May 2020. The dividing line between expansion and contraction for this report is 0.0.
- With the diffusion index for general activity running at -1.5 (versus -8.0 in March), the key takeaway from the report is that respondents’ expectations for growth over the next six months remain subdued.
- Existing home sales declined 2.4% month-over-month in March to a seasonally adjusted annual rate of 4.44 million versus a downwardly revised 4.55 million (from 4.58 million) in February. Sales were down 22.0% from the same period a year ago.
- The key takeaway from the report is the recognition that the inventory of existing homes for sale remains extremely tight, which is due in part to the strength of the labor market (and ability to work remotely) and the jump in mortgage rates that is deterring existing home owners’ interest in moving.
- The Leading Index was down 1.2% in March after falling a revised 0.5% (from -0.3%) in February.
- Weekly natural gas inventories increased by 75 bcf after increasing by 25 bcf a week ago.
Friday:
The major indices managed to eke out a slim gain on Friday’s options expiration day, but that wasn’t an impressive feat. The market was little changed from Thursday’s closing levels for the entire session as investors await earnings reports next week from many of the mega caps.
In general, outsized moves were limited to individual stocks like Dow component Procter & Gamble (PG), which reported pleasing fiscal Q3 results and affirmed its FY23 EPS outlook, and HCA (HCA), which also reported favorable earnings.
Bank stocks remained under pressure Friday after underperforming for most of the week. This weakness followed disappointing earnings from Regions Financial (RF). The SPDR Regional Bank ETF (KRE) fell 1.3% and the SPDR Bank ETF (KBE) logged a 1.2% decline. The S&P 500 financials sector (-0.4%) was among the weakest performers.
The materials sector (-0.9%) logged the biggest Friday decline due to a sizable loss in Freeport McMoRan (FCX) following its earnings report and a loss in Albemarle (ALB) in response to a Reuters report that Chile is planning to nationalize its lithium industry.
Reviewing Friday’s economic data:
- April IHS Markit Manufacturing PMI – Prelim 50.4; Prior 49.2
- April IHS Markit Services PMI – Prelim 53.7; Prior 52.6
Source: Briefing Investor
Week in Review: Not much movement [April 21-23]
The stock market didn’t experience much up or down price action this week. The S&P 500 closed at 4,137 last Friday, then closed at 4,133 this Friday. There was not much volatility in daily price action as well with the major indices languishing along, moving mostly sideways.
Investors were playing a waiting game ahead of a big batch of earnings results next week that will feature reports from some mega cap stocks, including Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), and Meta Platforms (META). These reports will follow disappointing Q1 results from Tesla (TSLA), which plunged nearly 10.0% on Thursday.
Meanwhile, Dow component Procter & Gamble (PG) rose 3.5% on Friday as investors digested its pleasing fiscal Q3 results and affirmation of its FY23 EPS outlook.
Bank stocks were a pocket of weakness this week following earnings reports from some regional banks, including Zions Bancorporation (ZION), Truist Financial (TFC), and Western Alliance Bancorp (WAL). Despite regional bank weakness, the S&P 500 financial sector was among the top performers with a 1.0% gain.
Other top performing sectors include real estate (+1.6%), consumer staples (+1.7%), and utilities (+1.1%). The communication services (-3.1%) and energy (-2.5%) sectors were the worst performers by a wide margin.
Market participants were also reacting to a slate of weak economic data, which contributed to the hesitant mindset due to a sense that slower growth will put pressure on future earnings. Data releases this week featured the highest continuing jobless claims level since November 27, 2021, the weakest reading for the Philadelphia Fed Index (-31.3) since May 2020, the weakest level for the U.S. Leading Economic Index since November 2020, and a 22% year-over-year decline in existing home sales in March.
The market continues to contend with the notion that the Fed will keep rates higher for longer. Philadelphia Fed President Harker (FOMC voter) said the Fed is going to need to do more to get inflation back down to target, according to Reuters. This followed New York Fed President Williams (FOMC voter) signaling support for another rate hike at the May FOMC meeting and Cleveland Fed President Mester’s remarks, according to CNBC, that policy needs to move somewhat further into tightening territory with the fed funds rate above 5.00%.
Earlier in the week, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there “for quite some time.”
This commentary from Fed officials contrasts the fed funds futures market, which is pricing in two rate cuts before the end of the year, according to the CME FedWatch Tool.
Oil prices declined this week, reflecting slowdown concerns. WTI crude oil futures fell 5.5% to $77.86/bbl. Natural gas futures rose 5.0% to $2.22/mmbtu.
The 2-yr Treasury note yield rose six basis points this week to 4.16% and the 10-yr note yield rose five basis points to 3.57%.
Below are truncated summaries of daily action:
Monday:
The stock market spent most of the session oscillating in a narrow range that included modest losses for the Dow, Nasdaq, and S&P 500. Investors were lacking conviction ahead of a slate of earnings news this week. Earnings results so far have been better than expected/feared, which helped limit selling interest, but valuation concerns kept the market from moving noticeably higher.
The market was able to log modest gains, though, thanks to a late afternoon rebound effort. The upside move coincided with a CNN reporter tweeting that House Speaker McCarthy said he thinks he has the 218 votes needed in the House to raise the debt ceiling. The sentiment shift may have been overdone, however, when considering that House Speaker McCarthy told CNBC earlier that a “no strings attached” debt ceiling increase will not pass the House. A proposal with strings attached (e.g., spending cuts in exchange for raising the debt ceiling) is unlikely to pass the Senate.
Still, the major indices all finished at their best levels of the day, leaving the S&P 500 just above 4,150. Even semiconductor equipment makers, which had been a notable pocket of weakness, came along for the afternoon rebound. The PHLX Semiconductor Index (SOX) was down as much as 1.5%, but closed with a modest 0.1% loss.
Weakness in the SOX was stemming from a Bloomberg report that Taiwan Semiconductor Manufacturing Co. (TSM) may soon announce a cut in its FY23 capex budget to $28-32 billion from $32-36 billion.
Treasuries settled with losses across the curve as the specter of the Fed raising rates again in May and then not pivoting to a rate-cut cycle anytime soon, along with a stronger-than-expected New York Empire State Manufacturing Survey for April, prompted some selling interest.
Reviewing Monday’s economic data:
Tuesday:
Tuesday’s session was decidedly mixed under the index surface. The main indices had a lackluster showing, spending most of the day trading right around their flat lines. Investors were reacting to a slate of earnings news, some positive economic data, and commentary from a few Fed officials.
Briefly, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there “for quite some time.”
Following their better-than-expected Q1 earnings, Bank of of America (BAC) and Lockheed Martin (LMT) were among the more influential winners on Tuesday. BAC, which was down as much as 1.9% at one point, helped drive a 0.3% gain in the S&P 500 financial sector and LMT helped propel the industrials sector (+0.5%) to the top of the sector leaderboard.
Meanwhile, Dow components Johnson & Johnson (JNJ) and Goldman Sachs (GS) registered outsized losses following their earnings reports. Both companies reported better-than-expected Q1 earnings, but GS came up shy with its revenue.
Bank stocks in general were weak as evidenced by the 1.3% decline in the SPDR Bank ETF (KBE) and the 2.2% decline in the SPDR Regional Bank ETF (KRE). Regional bank losses also weighed on the Russell 2000, which closed with a 0.4% loss.
Notably, homebuilders were a pocket of strength after this morning’s better-than-expected housing starts data from March, which was accented with welcome gains in both starts and permits for single family units. The SPDR Homebuilder ETF (XHB) was up 1.7% and the iShares U.S. Home Construction ETF (ITB) rose 2.3%.
Reviewing Tuesday’s economic data:
Wednesday:
Following a slate of earnings news since Tuesday’s close, the stock market had a lackluster showing. Major indices were confined to narrow trading ranges, registering only modest gains or losses throughout the session. The sideways price action was a reflection of a wait-and-see mindset ahead of earnings reports from most mega cap stocks next week and Tesla (TSLA) after Wednesday’s close.
The market had more of a negative bias initially, but several mega cap stocks recovered from early weakness and boosted index performance. Ultimately, the main indices closed off their lows of the day. Apple (AAPL), Amazon.com (AMZN), and NVIDIA (NVDA) were among the most influential winners. The Vanguard Mega Gap Growth ETF (MGK) rose 0.1% while the Invesco S&P 500 Equal Weight ETF (RSP), the market-cap weighted S&P 500, and the Nasdaq Composite all finished the session flat.
Outsized moves were mostly reserved for stocks with specific catalysts. Intuitive Surgical (ISRG) and Western Alliance Bancorp (WAL) were some of the best performers following their pleasing quarterly results. The latter fueled some buying interest in bank stocks. The SPDR S&P Bank ETF (KBE) rose 3.1% and the S&P Regional Bank ETF (KRE) was up 3.9% at Wednesday’s close.
Also, Morgan Stanley (MS) closed with a modest gain, rebounding from an opening 3.7% decline following its earnings results.
Treasury yields rose Wednesday, which acted as a headwind for equities. Price action in the bond market was a reflection of concerns about Fed policy. Some persistently high core inflation data for the eurozone and UK in March also contributed to selling interest.
Reviewing Wednesday’s economic data:
Thursday:
The stock market had a mostly negative disposition, digesting a slate of weak economic data and disappointing earnings results from Tesla (TSLA). Bank stocks were also a big drag on the broader market Thursday following several earnings misses from regional banks.
Despite Tesla’s sizable decline and other headwinds, index level performance was fairly resilient until mid-afternoon. Some relative strength from other mega cap names helped spur a rebound effort from openeing declines for the major indices, which traded right around their flat lines before selling picked up around 2:00 p.m. ET. The afternoon pullback looked technical in nature after the S&P 500 failed to break above the 4,150 level, hitting 4,148 at its high of the day.
Bank stocks were a notable pocket of weakness for the entire session. This followed relatively disappointing earnings reports from several regional banks, such as Zions Bancorporation (ZION) and Truist Financial (TFC). The SPDR Regional Bank ETF (KRE) fell 1.9% and the SPDR Bank ETF (KBE) decline 1.7%.
There were some big outperformers Thursday, however. Chief among them were the homebuilders following a positive response to D.R. Horton’s (DHI) impressive quarterly results and outlook. This fueled buying interest in other homebuilders as evidenced by the 1.7% gain in the iShares U.S. Home Construction ETF (ITB) and a 0.7% gain in the SPDR S&P Homebuilder ETF (XHB).
Reviewing Thursday’s economic data:
Friday:
The major indices managed to eke out a slim gain on Friday’s options expiration day, but that wasn’t an impressive feat. The market was little changed from Thursday’s closing levels for the entire session as investors await earnings reports next week from many of the mega caps.
In general, outsized moves were limited to individual stocks like Dow component Procter & Gamble (PG), which reported pleasing fiscal Q3 results and affirmed its FY23 EPS outlook, and HCA (HCA), which also reported favorable earnings.
Bank stocks remained under pressure Friday after underperforming for most of the week. This weakness followed disappointing earnings from Regions Financial (RF). The SPDR Regional Bank ETF (KRE) fell 1.3% and the SPDR Bank ETF (KBE) logged a 1.2% decline. The S&P 500 financials sector (-0.4%) was among the weakest performers.
The materials sector (-0.9%) logged the biggest Friday decline due to a sizable loss in Freeport McMoRan (FCX) following its earnings report and a loss in Albemarle (ALB) in response to a Reuters report that Chile is planning to nationalize its lithium industry.
Reviewing Friday’s economic data:
Source: Briefing Investor
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