Markets Whipsaw Higher – May 3 Market Recap

Markets Whipsaw Higher – May 3 Market Recap

Indices 

• Dow 38,675, +382 or +1.26%.  
• Nasdaq 16,156, +229 or +1.44%.  
• MSCI EAFE 2309.49, +34.17 or +1.50%.  
• S&P 5,127, +28 or +0.55%. 
• USD10Y 4.50%, -16.9bp or -3.62%. 
• WTI Crude $78.13 bbl, -$5.54 or -6.62%.  

Markets Whipsaw Higher 

Markets traded down sharply early in the week in response to an economic report that was previously never paid attention to, the Quarterly Employment Cost Index, which was higher than expected and continued to flame inflation fears. However, the following day, a dovish message from Fed Chair Powell all but ruling out additional interest rate hikes buoyed the markets and seemed to assuage investor’s inflation concerns. Jobless claims were lower than expected on Thursday and on Friday, a lower-than-expected Non-Farm Payrolls report, a slightly higher April unemployment report, and a benign Average Hourly Wages report all combined to send markets higher and for the time, put inflation fears, economic concerns, and potential rate hike worries to bed. 

Corporate earnings were a bit worrying in the quick service restaurant (QSR) space as multiple firms missed or reported mixed earnings results; McDonald’s (MCD), Starbucks (SBUX), Yum Brands (YUM), DoorDash (DASH) and Sysco (SYY, restaurant supplier) all disappointed. However, Coca Cola (KO) beat on higher prices, Amazon (AMZN) absolutely crushed their quarter and Qualcomm (QCOM) beat and raised their guidance. 

This Week: May 6 – May 10 

After three extremely busy weeks of economic data and corporate earnings, the calendar is light on both this week. While multiple Fed officials speak this week, the only economic data points are Thursday’s Initial Jobless Claims and May’s preliminary Consumer Sentiment. Corporate earnings highlights include Walt Disney (DIS), Reddit’s (RDDT) first report as a publicly traded company, electric vehicle maker Rivian (RIVN), DeFi company Robinhood (HOOD), and iconic racecar manufacturer Ferrari (RACE).

Economic Calendar 

• Monday – N/A. Earnings: Tyson Foods (TSN), Lucid Auto (LCID), Palantir Technologies (PLTR). 
• Tuesday – N/A. Earnings: Walt Disney (DIS), Reddit (RDDT), Rivian (RIVN), Toast (TOST). 
• Wednesday – N/A. Earnings: Uber (UBER), Airbnb (ABNB), AMC Entertainment (AMC), Robinhood (HOOD).  
• Thursday – Initial Jobless Claims. Earnings: Ferrari (RACE). 
• Friday – May Consumer Sentiment (preliminary). Earnings: N/A. 

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review. 

Last Week‘s Daily Trading Recap… 

Monday – Dow +146 to 38,386, Nasdaq +55 to 15,983, S&P +16 to 5,116, USD10Y -5.5bp to 4.6214%. 

• Nine of eleven S&P sectors traded higher today, led by Consumer Discretionary, Utilities, and Real Estate. 
• Tesla (TSLA) popped +15.31% today on news that Chinese regulators had removed restrictions on the beleaguered car maker which may allow it to roll out its Full-Service Driving (FSD) feature in the country. Currently Tesla offers FSD in China but only at Level 2 autonomous functionality. It is not clear if this move by the Chinese authorities clears the way for TSLA to roll out fully automated, Level 5 driving. 
• Boeing (BA) tapped the debt markets and issued $10 billion dollars of bonds today rated just above junk status. The troubled jet maker burned through $3.93 billion in cash during their first quarter and will most likely use the proceeds to refinance more than $12 million in debt maturing in 2025 and 2026.

Tuesday – Dow -570 to 37,815, Nasdaq -325 to 15,657, S&P -80 to 5,035, USD10Y +7.2bp to 4.598%. 

• All eleven S&P sectors traded down today, led lower by Energy, Consumer Discretionary, and Technology. 
• Consumer Confidence fell to a 21-month low to 97 vs expectations of 103.5 and vs last month’s 103.1 print. 
• The Q1 Employment Cost Index, to which no one has ever paid attention, was higher than expected at 1.2% vs +1.0% expected and vs +0.9% last month, further stoking inflation fears. 
• Earnings: Coca-Cola (KO) beat revenue and earnings estimates on prices that were on average, 13% higher than last year; KO traded down -0.44%. McDonalds (MCD) beat revenues but missed on earnings as the fast-food giant blamed the Middle East boycott and noted that their higher prices are scaring away lower income customers; MCD traded down -0.19%. Sysco (SYY) beat revenue estimates but missed their earnings expectations; SYY traded down -3.76%, Amazon (AMZN) blew out their earnings estimates, beat on revenues and traded up +1.27% post close. Starbucks (SBUX) traded down -11.85% in extended trading after missing both revenue and earnings estimates. 

Wednesday – Dow +87 to 37,903, Nasdaq -52 to 15,605, S&P -17 to 5,018, USD10Y -9.1bp to 4.595%. 

• All eleven S&P sectors traded down today, led lower by Energy, Consumer Discretionary, and Technology. 
• April ADP Private Payrolls were 192,000 vs 183,000 expected and vs last month’s 208,000 print. 
• April ISM Manufacturing fell back into contraction at 49.2% vs 49.9% expected and vs 50.3% last month. 
• March JOLTS fell to 8.5 million vs 8.7 million expected and vs 8.8 million last month. 
• As expected, the Fed left rates unchanged today. Fed Chair Powell noted that even though progress against inflation has stalled and thus immediate rate cuts are not warranted, he also all but ruled out another rate hike. 
• Earnings: Mastercard (MA) beat earnings and posted in line revenues but guided current year revenues lower; MA traded down -2.02%. Yum Brands (YUM) missed on earnings and revenues and traded down -4.19%. DoorDash (DASH) lost more than expected on slightly better revenues and traded down -15.27% post close. Qualcomm (QCOM) beat their estimates, guided higher and traded up +4.06% in the extended session. 

Thursday – Dow -322 to 38,225, Nasdaq +235 to 15,841, S&P +46 to 5,064, USD10Y -2.4bp to 4.571%. 

• Nine of the eleven S&P sectors traded higher today, led by Technology, Consumer Discretionary, and Real Estate. 
• Jobless claims fell to 208,000 vs the 212,000 forecast and vs. last week’s slightly revised higher print of 208,000. 
• Earnings: Apple (APPL) beat earnings, missed on revenues and announced a $110 billion stock buyback; APPL traded up +6.03% in the extended session. Coinbase (COIN) beat their revenue estimates handily and reported earnings that may not be comparable to estimates; COIN traded down -2.24% post close. 

Friday – Dow +450 to 38,675, Nasdaq +315 to 16,156, S&P +63 to 5,127, USD10Y -7.1bp to 4.50%. 

• Ten of the eleven S&P sectors traded higher today, led by Technology, Communication Services and Materials. 
• April Non-Farm Payrolls were well under expectations at 174,000 vs 240,000 and vs 315,000 last month. 
• The April Unemployment Rate ticked up to 3.9% vs last month’s +3.8% print. 
• April Average Hourly Wages were lower than expected at +0.2% vs +0.3% and vs +0.4% last month.

If you know of any friends or family members who could benefit from our services and these types of communiques, 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, ACHR, AVGO, BITB, ETHE and GBTC.