Quiet Week, Earnings Continue, and PCE Looms (April 21 Market Recap)
Indices
Dow 33,808, -78 or –0.23%.
Nasdaq 12,072, -51 or –0.42%.
S&P 4,133, –4 or –0.09%.
USD10Y 3.522% +4.8bp or +1.4%.
WTI Crude $77.95 bbl, -$4.73 or –5.72%.
Quiet Week
Markets were mostly unchanged over the week despite earnings season. Economic data was largely benign, that is it was neither too strong nor too weak in a way to push the debate on Federal Reserve rate hike policy one way or another. Initial jobless claims continue to rise and this along with the monthly jobs report should be monitored closely as warning signs of a slowing economy.
Earnings Continue
The heart of earnings season begins this week with tech/communication bellwethers Microsoft, Alphabet, Meta (formerly Facebook), and Amazon are reporting. We should also get some insight regarding the strength of the consumer as Chipotle Mexican Grill, McDonalds, Visa, Mastercard, UPS, American Air, Southwest Air, General Motors and Pepsi all report as well.
PCE Looms
On Friday, the March Personal Consumption Expenditure (PCE) report will be released. This is the Fed’s preferred measure of inflation. March 2022’s highly inflationary print of +1.00% month over month (MoM) will be replaced by the March 2023 number which means that the new year over year (YoY) figure should decline to 4%-4.5%. If last month’s increase of +0.3% is repeated for example, the YoY number will decrease from 5% to 4.3%. If this comes to pass, it may give the Fed reason to pause their rate hike cycle after raising one more 25bp increase at the upcoming May 3 meeting.
Economic Calendar
- Monday – N/A. Earnings: Coca-Cola (KO), First Republic (FRC).
- Tuesday – April Consumer Confidence. Earnings: Microsoft (MSFT), Alphabet (GOOGL), Chipotle Mexican Grill (CMG), General Motors (GM), McDonalds (MCD), Pepsi (PEP), UPS (UPS), Visa (V).
- Wednesday – March Durable Goods. Earnings: Meta (META), Ebay (EBAY).
- Thursday – Initial Jobless Claims, Q1 GDP. Earnings: Amazon (AMZN), American Airlines (AAL), Caterpillar (CAT), Mastercard (MA), Southwest Air (SWA).
- Friday – March Personal Consumption Expenditure (PCE). Earnings: Chevron (CVX), Exxon Mobil (XOM).
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.
April 21 Daily Trading Recap…
Monday – Dow +100 to 33,987 Nasdaq +34 to 12,157, S&P +13 to 4,151, USD10Y +6.9bp to 3.591%.
Tuesday – Dow +98 to 33,684, Nasdaq –52 to 12,031 S&P +0 to 4,108, USD10Y +1.9bp to 3.434%.
- Nine of eleven S&P sectors traded higher, led by Energy, Financials, and Materials.
- Earnings: Netflix (NFLX) beat earnings but missed revenue estimates. Subscriber growth was in line.
Wednesday – Dow –79 to 33,897, Nasdaq +4 to 12,157, S&P -0 to 4,154, USD10Y -1.3bp to 3.602%
- Earnings: Tesla (TSLA) beat earnings and revenue projections, but analysts focused on declining margins and a 20%+ drop in net income year-over-year. IBM (IBM) beat their earnings numbers but missed on revenues. Lam Research beat their numbers but slashed forward guidance.
Thursday – Dow -110 to 33,786, Nasdaq -97 to 12,059, S&P -24 to 4,129, USD10Y –5.7bp to 3.545%.
- Ten of eleven S&P sectors traded down today, led lower by Consumer Discretionary Real Estate, and Energy.
- Jobless claims rose again to 245,300 vs the 240,000 forecast and last week’s slightly revised print of 240,000 (originally 239,000).
- April Philly Fed Manufacturing Index was a disaster at –31.3 vs –20 expected and last month’s -23.2.
- March Leading Economic Indicators were worse than expected at –1.2% vs –0.7% expected and last month’s -0.5% print.
- Chile’s President announced plans to nationalize the country’s lithium business. The plan must pass through their Congress where his party does not have a majority, so this is far from a done deal but bears watching. Albermarle (ALB), which owns a contract mining lithium in Chile, fell 10% on the news.
- Earnings: American Express (AXP) beat top and bottom-line estimates.
Friday – Dow +22 to 33,808, Nasdaq +13 to 12,072 S&P +4 to 4,133 USD10Y +2.5bp to 3.57%.
- Seven of eleven S&P sectors traded down today, led lower by Real Estate, Utilities, and Healthcare.
- April S&P U.S. Services PMI beat expectations at 53.7 vs 51.5 expected and vs last month’s print of 52.6.
- April S&P Manufacturing PMI was better at 50.4 vs 49 expected and vs last month’s 49.2 print.
- Earnings: Proctor and Gamble (PG) beat their numbers and raised their forecast.
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.