The Stock Market Didn't Experience Much Up Or Down Price Action This Week. The S&P 500 Closed At 4,137 Last Friday, Then Closed At 4,133 This Friday.
There was not much volatility in daily price action as well with the major indices languishing along, moving mostly sideways.
Investors were playing a waiting game ahead of a big batch of earnings results next week that will feature reports from some mega cap stocks, including Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOG), and Meta Platforms (META). These reports will follow disappointing Q1 results from Tesla (TSLA), which plunged nearly 10.0% on Thursday.
Meanwhile, Dow component Procter & Gamble (PG) rose 3.5% on Friday as investors digested its pleasing fiscal Q3 results and affirmation of its FY23 EPS outlook.
Bank stocks were a pocket of weakness this week following earnings reports from some regional banks, including Zions Bancorporation (ZION), Truist Financial (TFC), and Western Alliance Bancorp (WAL). Despite regional bank weakness, the S&P 500 financial sector was among the top performers with a 1.0% gain.
Other top performing sectors include real estate (+1.6%), consumer staples (+1.7%), and utilities (+1.1%). The communication services (‐3.1%) and energy (‐2.5%) sectors were the worst performers by a wide margin.
Market participants were also reacting to a slate of weak economic data, which contributed to the hesitant mindset due to a sense that slower growth will put pressure on future earnings. Data releases this week featured the highest continuing jobless claims level since November 27, 2021, the weakest reading for the Philadelphia Fed Index (‐31.3) since May 2020, the weakest level for the U.S. Leading Economic Index since November 2020, and a 22% year‐over‐year decline in existing home sales in March.
The market continues to contend with the notion that the Fed will keep rates higher for longer. Philadelphia Fed President Harker (FOMC voter) said the Fed is going to need to do more to get inflation back down to target, according to Reuters. This followed New York Fed President Williams (FOMC voter) signaling support for another rate hike at the May FOMC meeting and Cleveland Fed President Mester's remarks, according to CNBC, that policy needs to move somewhat further into tightening territory with the fed funds rate above 5.00%.
Earlier in the week, St. Louis Fed President Bullard (not an FOMC voter) acknowledged the need to raise rates further since inflation remains persistently high and Atlanta Fed President Bostic (not an FOMC voter) said in a CNBC interview that he thinks the Fed should hike rates one more time and hold rates there "for quite some time."
This commentary from Fed officials contrasts the fed funds futures market, which is pricing in two rate cuts before the end of the year, according to the CME FedWatch Tool.
Oil prices declined this week, reflecting slowdown concerns. WTI crude oil futures fell 5.5% to $77.86/bbl. Natural gas futures rose 5.0% to $2.22/mmbtu.
The 2‐yr Treasury note yield rose six basis points this week to 4.16% and the 10‐yr note yield rose five basis points to 3.57%.
Nasdaq Composite: ‐0.4% for the week / +15.3% YTD
S&P 500: ‐0.1% for the week / +7.7% YTD
S&P Midcap 400: +0.4% for the week / +2.8% YTD
Dow Jones Industrial Average: +1.2% for the week / +2.3% YTD
Russell 2000: +0.6% for the week / +1.7% YTD