Approximately one-half of the S&P 500 companies have reported quarterly results.
74% have exceeded sales expectations, 79% have exceeded profit expectations. So far, much better than anticipated, however when you blend all the companies together, profits have fallen by approximately 4% from last quarter. Again, better than anticipated!!!
In addition to corporate earnings reports, last week announced the preliminary reading on 1st quarter Gross Domestic Product (GDP) of 1.1%, which was below the estimate of 2%. Keep in mind the number will be adjusted two more times, as more data is known from late February & March. This reading of 1.1% indicated the overall economy is slowing. Of course, the main question is how much more slowing is in the cards?
Most equity indexes continued the climb higher last week, with the Dow rising .86%, the S&P 500 .89%, and the Nasdaq Composite 1.28%. Small caps went the opposite direction, falling (1.24%) for the week.
Over the pond, foreign stocks were flattish, up .17% and emerging down (.27%).
Bond yields for now, are remaining range bound with the 10-Year US Treasury finishing the week with a yield of 3.43%.
This Week – A Plethora of Data
This week welcomes plenty of data for the markets to chew on.
Several more companies will report earnings, including Apple, MGM Resorts, Stryker Corp, Pfizer, Simon Property Group, Cigna & many more.
This week’s economic data will include reports on manufacturing, factory orders, job openings, and the jobs report on Friday!
Of course, the most important announcement will come from the Fed on Wednesday. It is widely expected the Fed will raise rates another .25%. Keep in mind, the Fed has stated their intention to keep rates higher for longer.
In my opinion, for now, rates are as high as they need to go, without increasing rates by another .25%. I believe the best course of action is for the Fed to sit back for a few months.
Bank lending will be more restrictive for homes, auto loans, and corporate loans. This will eventually have the impact of slowing the economy further. A slowing economy will lead to more lay offs, which is one of the objectives of Powell & company.
A well allocated, diversified portfolio based on your own specific needs is still as prudent as always.
US Treasury and corporate bonds have attractive yields, and the stock market likes to crawl the wall of worry…..
It’s easier to fixate on the negative, such as the debt-ceiling issue, politics, gas prices, inflation, and more. The news media will not let you forget!! Hey, ratings equal money!!
If you think back to the challenging times we’ve all been through, there has always been something to worry about. After each event, the markets crawled higher, increasing our wealth. I fully expect when this current bought of inflation is over, the market will move to new highs!
Client Tax Return Reminder
Just a reminder, if you are a current client and have not forwarded your 2022 tax return over to us, please do so when convenient. We’ll be sending you a thorough summary report of your return. At your next review meeting, we’ll be forecasting 2023 to see what strategies, if any, are warranted.