May 19, 2023, Weekly Stock Market Return Recap. Equity markets ended the week higher as prospects regarding a deal to raise the debt ceiling boosted market sentiment. The Nasdaq led the indexes up +3%, followed by the S&P 500 +1.6% and the Dow Jones at +0.4%. In Bank of America’s latest fund manager survey, 71% of investors indicated they expect a debt ceiling resolution before the “X-Date.” The other driving force for market sentiment has been the FOMC omitting a line from its previous statements of “anticipates that some additional policy firming may be appropriate.” This line removal set the stage for expectations of a Fed rate increase pause for the June meeting. On the economic front, retail sales rose 0.4% last month, missing economists' expectations for a 0.8% increase. Case in point, Home Depot (HD) reported its biggest revenue miss in more than two decades. Faltering consumer demand has forced the home-improvement retailer to lower its forecast for the year. Also, Target’s (TGT) management warned about a continued softening of consumer demand.
May 12, 2023, Weekly Stock Market Return Recap. The S&P 500 and Dow Jones Industrial Average logged their second weekly loss in a row of -0.2% and 0.03%, respectively. The regional bank turmoil continues to weigh on investor sentiment. Case in point, data showing consumer sentiment declined by more than expected to 63.5 in April, the lowest reading since last November last year. Though the broad market stock index is up mid-single digits on the year, there is an unhealthy narrow market breadth with the top 10 stocks holding about 30% weight in the index and comprising around 70% of year-to-date performance. According to this week’s data from the Bureau of Labor Statistics released Wednesday morning, the Consumer Price Index (CPI) revealed headline inflation rose 0.4% over last month and 4.9% over the prior year in April.
May 5, 2023, Weekly Stock Market Return Recap. The major Indices opened the week on a positive note, but couldn't hold onto any gains, with the S&P 500 ending the week 0.8 percent lower. Regional banks suffered another day of sizable losses as anxiety crippled the markets Thursday with new set of banks, PacWest and Western Alliance, at risk of failure, prompting The SPDR S&P Regional Banking index to close at its lowest level since October 2020. Investors were so pessimistic that fed-fund futures began to register as much as a 10% chance the Fed will cut rates in June. Also, energy has been a drag on stocks these past weeks as the markets price-in a recession. For example, GDP growth for Q1 did decline, from 2.6% in Q4 of 2022 to 1.1%; the consensus was in the 1.6%-1.8% range. However, it appears any recession will have a shining light of employment which means healthy, with the April jobs report showing stronger than expected job gains with the unemployment rate falling to 3.4%. On the week, the Fed raised interest rates 0.25%, escalating inflation fight. Fed Chair Powell’s comments were "Inflation pressures continue to run high," and "The process of getting inflation back down to 2% has a long way to go." Powell noted the removal of a sentence that was previously in place in the Fed's rate hike announcements that said "some additional policy increases might be appropriate." Powell characterized the omission as "meaningful," saying a decision about any additional rate hikes would be "data dependent."