Repricing Continues Given Rate Cut Disappointment – April 19 Market Recap
Indices
- Dow 37,986, +3 or +0.00%.
- Nasdaq 15,282, -893 or -5.52%.
- MSCI EAFE 2236.31, -53.45 or -2.33%.
- S&P 4,967, -156 or -3.05%.
- USD10Y 4.615%, +11.6bp or +2.58%.
- WTI Crude $82.70 bbl, -$2.82 or -3.30%.
Repricing Continues Given Rate Cut Disappointment
The Israeli retaliation for Iran’s drone and missile strike last week was largely ignored by the markets. In fact, WTI Crude fell nearly 3% last week despite the ongoing conflict in the Middle East. However, equities continued to reprice themselves lower, reacting to the fact that the Fed will most likely be cutting rates only twice this year as opposed to the three times the investment community expected at the beginning of the year. A strong March Retail Sales report and the Fed’s Beige book which showed modest economic growth and little change in inflation did nothing but reinforce the likelihood that the Fed stays “higher for longer.”
It was a good week for earnings with financial services firms Goldman Sachs (GS), Schwab and American Express (AXP) all exceeding expectations. Rail company CSX (CSX) helped reassure some investors of the state of the economy after the horrific earnings call from trucking and logistics company JB Hunt (JBHT) last week. CSX beat numbers and reaffirmed their full year guidance. Netflix (NFLX) reported a great quarter but guided their Q2 revenues lower and announced that they will discontinue reporting subscriber numbers.
This Week: April 22 – April 26
It’s a big week for tech earnings with Meta (META), Microsoft (MSFT), and Alphabet (GOOGL) all reporting. The auto manufacturers will be well represented with General Motors (GM), Ford Motor (F), and Tesla (TSLA) on the calendar. Consumer names Pepsi (PEP) and Chipotle Mexican Grill (CMG) will round out the week.
Economic data this week will include Q1 Gross Domestic Product (GDP), the April Personal Consumption Expenditure (PCE), an important inflation data point for the Federal Reserve, and April U.S. flash Services and Manufacturing PMIs.
Economic Calendar
- Monday – N/A. Earnings: N/A.
- Tuesday – April Flash U.S. S&P Services and Manufacturing PMI. Earnings: General Motors (GM), Pepsi Co (PEP), Tesla (TSLA), Visa (V).
- Wednesday – March Durable Goods Orders. Earnings: Boeing (BA), Meta (META), Chipotle Mexican Grill (CMG), Ford Motor (F).
- Thursday – Initial Jobless Claims, Q1 Gross Domestic Product. Earnings: American Airlines (AAL), Caterpillar (CAT), Southwest Airlines (LUV), Microsoft (MSFT), Alphabet (GOOGL).
- Friday – April PCE Index. Earnings: Chevron (CVX) and Exxon (XOM).
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 -248 to 37,735, Nasdaq -290 to 15,885, S&P -62 to 5,061, USD10Y +12.9bp to 4.628%.
- All eleven S&P sectors traded down today, led lower by Technology, Real Estate, and Communication Services.
- April Empire State Manufacturing was worse than expected at-14.3 vs –10.0 but much improved vs last month’s -20.9 print.
- March Retail Sales were strong at +0.7% vs +0.3% expected but down vs last month’s +0.9% print.
- Earnings: Goldman Sachs (GS) blew out both their earnings and revenue estimates and traded up +2.92%. Charles Schwab (SCHW) beat earnings estimates and reported inline revenues for the quarter. Total client assets hit a record of $9.1 trillion. SCHW traded up +1.71%.
Tuesday – Dow +64 to 37,798, Nasdaq -19 to 15,865, S&P -10 to 5,051, USD10Y +3.1bp to 4.659%.
- Nine of eleven S&P sectors traded higher today, led by Real Estate, Utilities, and Consumer Staples.
- Boeing (BA) fell another -1.89% today after announcing record low deliveries for the quarter. The beleaguered aircraft manufacturer is testing its 52-week low.
Wednesday – Dow -46 to 37,753, Nasdaq -182 to 15,683, S&P -29 to 5,022, USD10Y -7.4bp to 4.585%.
- Seven of eleven S&P sectors traded down today, led lower by Technology, Real Estate, and Consumer Discretionary.
- The Fed’s Beige Book showed modest growth in ten of the twelve Fed regions with the other two reporting no change from the previous report. The banks reported inflation running at about the same pace as the last report while employment rose at a slight pace although shortages of skilled labor in the manufacturing and healthcare sectors still persist. The report covered the eight weeks prior to April 8.
- Earnings: CSX (CSX) reported better-than-expected earnings and revenues, reaffirmed 2024 full-year guidance and traded up +2.90% post close.
Thursday – Dow +22 to 37,775, Nasdaq -82 to 16,442, S&P -11 to 5,011, USD10Y +6.2bp to 4.647%.
- Seven of the eleven S&P sectors traded higher today, led by Communication Services, Utilities, and Consumer Staples.
- Jobless claims fell to 212,000, vs 215,000 forecast and vs. last week’s slightly revised higher print of 212,000 (originally 211,000).
- The April Philadelphia Federal Manufacturing Survey was very strong at 15.5 vs 2.5 expected and vs last month’s 3.2 print.
- March U.S. Leading Economic Indicators were disappointing at -0.3% vs -0.1% expected and vs last month’s -0.2% print.
- Earnings: Netflix (NFLX) blew out their earnings estimate, reported inline revenues but guided second quarter revenue lower; NFLX traded down –4.76% in after-hours trading.
Friday – Dow +211 to 37,986, Nasdaq -319 to 15,282, S&P -44 to 4,967, USD10Y -3.2bp to 4.615%.
- Six of the eleven S&P sectors traded higher today, led by Utilities, Financials, and Energy.
- Earnings: Proctor and Gamble (PG) beat earnings but missed their revenue estimates as volumes have remained depressed after two years of price hikes. PG raised their current year earnings forecast and traded up +0.54%. American Express (AXP) blew out their earnings expectations and reported slightly better revenues on increased demand for their premium cards and increased consumer spending; AXP traded up +6.23%.
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.