Apple and Non-Farm Payrolls Save the Week (May 5 Market Recap).
Indices
- Dow 33,674, -424 or –1.24%.
- Nasdaq 12,2352 +9 or +0.07%.
- MSCI EAFE 2144.63, +0.78 or +0.03%.
- S&P 500 4,136, -33 or -0.79%.
- USD10Y 3.446% -0.6bp or -0.17%.
- WTI Crude $71.32 bbl, -$5.31 or –6.93%.
Apple & Non-Farm Payrolls Save the Week
After four consecutive losing trading sessions with worries over recession and the health of the regional bank sector, markets rebounded on Friday, cheering Apple’s earnings and a robust April jobs report. Though Apple‘s revenues were down 3% from the prior quarter, the tech giant beat both its revenue and earnings numbers, raised its dividend 4%, and extended its stock buyback program.
The April Non-Farm Payrolls report was also received with a sigh of relief as many market observers were concerned that the labor market was showing signs of cracking (weekly jobless claims have been above 200k for five consecutive weeks and the four-week average has been climbing higher). Instead, the report showed a robust 253,000 jobs were added in April, far exceeding the 188,000 estimate.
The Fed Eases off the Brakes
On Wednesday, the Fed, as expected, increased the Federal Funds rate by +0.25% but crucially removed language in their statement that had warned that future hikes could be warranted. Further, during his press conference, Fed Chair Jerome Powell, in answering a question regarding the missing sentence, responded that the FOMC had removed the language because they no longer anticipated the need for further rate hikes.
Introducing MSCI EAFE
Given the outperformance of developed international markets thus far this year (+11.8%), we thought it relevant to add a new index to the snapshot of data that leads off each blog. The MSCI Europe, Australasia, and Far East index is the gold standard for measuring the performance of developed international markets. The companies comprising the index are large-cap and mid-cap in size representing twenty-one countries from the regions described above excluding the United States and Canada. Typically, developed international markets trade at a discount to domestic markets and their dividend yields are higher. This situation holds true today. You can learn more about which countries are included in the index and its performance this year and in the past here.
Next Week
Earnings season begins to wane a bit but not before Disney, Airbnb, PayPal and Wynn Resorts all report. In addition, more inflation data is due on Wednesday and Thursday with the release of April’s Consumer Price Index (CPI) and Producer Price Index (PPI) respectively.
Economic Calendar
- Monday – N/A. Earnings: PayPal (PYPL).
- Tuesday – N/A. Earnings: Airbnb (ABNB), Toast (TOST), Wynn Resorts (WYNN).
- Wednesday – April Consumer Price Index. Earnings: Disney (DIS), Robinhood (HOOD).
- Thursday – Initial Jobless Claims, Producer Price Index. Earnings: N/A.
- Friday – May Preliminary Consumer Sentiment. Earnings: N/A.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
May 5 Daily Trading Recap…
Monday – Dow -46 to 34,051, Nasdaq -14 to 12,212, S&P -2 to 4,167, USD10Y +12.2bp to 3.574%.
- Six of eleven S&P sectors traded down, led lower by Energy, Consumer Discretionary, and Real Estate.
- First Republic Bank (FRC) as expected, was taken into receivership by the FDIC and was promptly sold to JPMorgan Chase. It is the fourth bank failure of the year and is the second largest bank failure in U.S. history, behind Washington Mutual.
- April U.S. S&P Manufacturing PMI missed at 50.2 vs 50.4 expected and last month’s 49.2 print.
- April ISM U.S. Manufacturing Index was slightly better than expectations at 47.1% vs 46.7% and vs last month’s 46.3%.
- Earnings: MGM Resorts beat top and bottom-line expectations and traded up +2.49%. Norwegian Cruise Lines (NCLH) beat their numbers, guided higher, and is trading up +8.91%.
Tuesday – Dow –367 to 33,684, Nasdaq –132 to 12,080, S&P –48 to 4,119, USD10Y -13.5bp to 3.439%.
- Ten of eleven S&P sectors traded down, led lower by Energy, Financials, and Communication Services.
- March JOLTS was 9.6 million, below expectations of 9.7 million and the lowest level seen since March 2021.
- WTI Crude fell 5.3% to $71.66/bbl, its lowest close since March on recession fears.
- Earnings: Advanced Micro Devices (AMD) beat expectations but traded lower after guiding their current quarter lower. Clorox (CLX) beat expectations, announced another round of price increases but cut their full year guidance. Ford Motor (F) beat their numbers but announced a $750 million loss in their EV unit. Starbucks (SBUX) handily beat their estimates on better same store sales both in China and in the U.S. Uber (UBER) beat their numbers.
Wednesday – Dow –270 to 33,4148, Nasdaq -55 to 12,025, S&P –28 to 4,090, USD10Y -3.6bp to 3.403%
- All eleven S&P sectors traded down, led lower by Energy, Financials and Materials.
- The FOMC as expected, raised interest rates by 25bp. In its statement it removed language that had previously stated that further rate hikes may be appropriate.
- The April ADP Employment Report showed an addition of +290,000 jobs vs 133,000 expected and vs 142,000 additions in March.
- The saga of Regional Banks continues: PacWest Bancorp (PACW) fell -56% in after-hours trading after Bloomberg broke the story that the bank is pursuing “strategic options” including a possible sale. Western Alliance Bancorp (WAL) fell -27%, Comerica (CMA) fell -10% and KeyCorp (KEY) fell -7% after the story broke.
- Earnings: CVS Health (CVS) blew out their numbers but lowered full year guidance due to acquisition costs. Qualcomm (QCOM) fell –6.5% in the extended session after guiding their fiscal Q3 lower. Trip Advisor (TRIP) fell 9.06% after reporting a mixed quarter. Yum Brands (YUM), owner of KFC and Pizza Hut reported a mixed quarter, better results in China, and traded down 3.9% in the regular session.
Thursday – Dow -286 to 33,1272, Nasdaq -58 to 11,966, S&P -30 to 4,061, USD10Y –5.2bp to 3.351%.
- Jobless claims rose again to 242,000 vs the 236,000 forecast and last week’s slightly revised lower print of 229,000 (originally 230,000).
- Earnings: Apple (APPL) beat their expectations on strong iPhone sales. Coinbase (COIN), beat revenue and earnings expectations but missed on user numbers. DoorDash (DASH), beat their numbers. Expedia (EXPE) missed both their earnings and revenue estimates. Lyft (LYFT) beat their numbers but guided their fiscal first quarter lower.
Friday – Dow +546 to 33,674, Nasdaq +269 to 12,235, S&P +75 to 4,136, USD10Y +9.5bp to 3.446%.
- All eleven S&P sectors traded up today, led by Energy, Technology, and Financials.
- April Non-Farm Payrolls added 253,000 jobs vs 180,000 expected and vs last month’s 165,000 print.
- April Unemployment Rate fell to 3.4% vs 3.6% expected and 3.5% last month.
- April Average Hourly Wages rose +0.5% vs +0.3% expected and +0.3% last month.
- Earnings: AMC Entertainment (AMC) lost less than expected on greater than expected revenues.
If you know of any friends or family members who could benefit from our services and these types of communiques during these unique times, we are accepting new clients and offer a complimentary one-hour review.
Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ETHE, GBTC, and TSLA.