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Market Brief: May 2023

May 2, 2023

The Markets (as of market close April 28, 2023)

Stocks ended April generally higher, despite several lackluster sessions along the way. Each of the benchmark indexes listed here gained ground over their March closing values, except for the small caps of the Russell 2000. Investors spent most of April weighing positive news on corporate earnings against concerns about the financial strength of regional banks and the Federal Reserve's next move relative to interest rates as it continues to battle inflation. The Dow enjoyed its best month since January. The Global Dow and the large caps of the S&P 500 also gained at least 1.5%. The Nasdaq barely eked out a gain on the heels of a strong last week of April.

Solid corporate earnings in the first quarter helped provide momentum for stocks. As of the end of April, roughly 79% of the S&P 500 companies that reported earnings have exceeded estimates. According to FactSet, about half of the S&P 500 companies have recorded their best performance relative to analyst expectations since the fourth quarter of 2021. Some analysts now expect first-quarter earnings for S&P 500 companies to decline 1.9% from a year ago, which is much better than the 5.1% drop expected at the start of April.

Several market sectors posted solid gains in April, while others closed the month lower. Consumer staples, health care, communication services, utilities, energy, and financials closed higher, while consumer discretionary, industrials, materials, information technology, and real estate ended lower.

Manufacturing activity rebounded from a moribund February, as it picked up some steam in March. Durable goods orders increased in March after falling in each of the previous two months. The purchasing managers' index rose for the third straight month in March, but remained below 50.0, which indicates contraction. Services, on the other hand, expanded into positive territory, as the services PMI™ increased to 52.6 in March.

Inflationary indicators showed price pressures may be easing. Both the Consumer Price Index and the Personal Consumption Expenditures Price Index inched up 0.1% in March.

IBond prices edged higher in April, with yields dipping lower. Ten-year Treasury yields slipped 4 basis points from March. The 2-year Treasury yield ended the month at 4.00%. The dollar declined against a basket of world currencies. Gold prices ended April higher but slid below $2,000.00 per ounce where they spent much of the month.

Crude oil prices increased in April after falling in each of the previous five months. Oil prices have fallen due to an unusually warm winter in the United States and Europe. OPEC+ has indicated that it will cut production in the coming months, which may impact prices moving into the summer months. The retail price of regular gasoline was $3.656 per gallon on April 24, $0.235 higher than the price a month earlier but $0.451 lower than a year ago.

Market/Index 2022 Close Prior Month As of April 28 Monthly Change YTD Change
DJIA 33,147.25 33,274.15 34,098.16 2.48% 2.87%
Nasdaq 10,466.48 12,221.91 12,226.58 0.04% 16.82%
S&P 500 3,839.50 4,109.31 4,169.48 1.46% 8.59%
Russell 2000 1,761.25 1,802.48 1,768.99 -1.86% 0.44%
Global Dow 3,702.71 3,919.85 3,984.56 1.65% 7.61%
Fed. Funds target rate 4.25%-4.50% 4.75%-5.00% 4.75%-5.00% 00 bps 50 bps
10-year Treasuries 3.87% 3.49% 3.45% -4 bps -42 bps
US Dollar-DXY 103.48 102.59 101.67 -0.90% -1.75%
Crude Oil-CL=F $80.41 $75.57 $76.73 1.54% -4.58%
Gold-GC=F $1,829.70 $1,987.80 $1,997.90 0.51% 9.19%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Looking Ahead

The Federal Open Market Committee (FOMC) meets at the beginning of May. Most predict the Committee will raise interest rates by 25 basis points. The April job figures are released in early May. The job market has yet to show signs of cooling, although most predict job growth will wane this year, possibly beginning in April.

Data sources: Data sources: Economic: Based on data from U.S. Bureau of Labor Statistics (unemployment, inflation); U.S. Department of Commerce (GDP, corporate profits, retail sales, housing); S&P/Case-Shiller 20-City Composite Index (home prices); Institute for Supply Management (manufacturing/services). Performance: Based on data reported in WSJ Market Data Center (indexes); U.S. Treasury (Treasury yields); U.S. Energy Information Administration/ Market Data (oil spot price, WTI, Cushing, OK); (spot gold/silver); Oanda/FX Street (currency exchange rates). News items are based on reports from multiple commonly available international news sources (i.e., wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities, and should not be relied on as financial advice. Forecasts are based on current conditions, subject to change, and may not come to pass. U.S. Treasury securities are guaranteed by the federal government as to the timely payment of principal and interest. The principal value of Treasury securities and other bonds fluctuates with market conditions. Bonds are subject to inflation, interest-rate, and credit risks. As interest rates rise, bond prices typically fall. A bond sold or redeemed prior to maturity may be subject to loss. Past performance is no guarantee of future results. All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.

The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 largest, publicly traded companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. The U.S. Dollar Index is a geometrically weighted index of the value of the U.S. dollar relative to six foreign currencies. Market indexes listed are unmanaged and are not available for direct investment.

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