Weekly Commentary (4/24/23) – Markets Finish Mostly Lower on the Week

April 24, 2023

Equity markets finished mostly lower last week as investors digested first quarter earnings reports and economic releases.

For the week, the DJIA lost 0.19% while the S&P 500 dropped 0.09%. The tech-heavy Nasdaq finished lower by 0.42%. For the week, the MSCI EAFE Index inched higher by 0.05% while emerging market equities (MSCI EM) dropped 1.95%. Small company stocks, represented by the Russell 2000, advanced 0.59%. Fixed income, represented by the Bloomberg/Barclays Aggregate, finished lower by 0.23% for the week as yields moved slightly higher. As a result, the 10 YR US Treasury closed at a yield of 3.57% (up 5bps from the previous week’s closing yield of ~3.52%) as investors reacted to tepid bank earnings and expectations for a May rate hike by the Fed. Gold prices closed at $1,979.50/oz – down 1.13%. Oil prices moved lower by 5.53% to $77.87.

Economic news released last week confirmed a fairly resilient yet weakening economy (no surprise). Housing starts dropped 0.8% month-over-month in March as higher interest rates impacted both builders and new home buyers. Initial US jobless claims came in at 245k last week, higher than the expected 240k. Finally, S&P Global’s Flash April PMI Composite rose to 53.5 – better than expected but indicating that inflation continues to be sticky. Average prices for goods and services increased for the third consecutive month with April’s increase being the fastest since September.

As we close out April this week (believe it or not), expect a lot of news flow. Earnings are on tap for 170 companies in the S&P 500, including some of the biggest technology companies (Apple, Amazon, Google/Alphabet, Meta, Microsoft and others). Consumer Confidence and New Home Sales data will be released on Tuesday. Wednesday brings an update on Durable Goods Orders. The closely watched PCE inflation report will be released on Friday, and that should give investors some insight into the Fed’s upcoming meetings and thinking. Also, on Friday will be the release of April’s Chicago PMI and the University of Michigan Consumer Sentiment for April.

There is an expression – never short a dull market – with the VIX index (also known as the fear index) trading around 17 (down from ~33 last year) it seems as though traders are somewhat complacent. We expect some market volatility this week as investors digest a slew of earnings and economic releases. Diversification, patience and a bias towards quality will help investors manage through this period of uncertainty.

Enjoy the week.

“Try to be like the turtle – at ease in your own shell.” – Bill Copeland