By: Dave Chenet, CFA, CAIA®
| Close | Weekly return | YTD return | |
| S&P 500 | 4,133.52 | -0.10% | 7.66% |
| Nasdaq Composite | 12,072.46 | -0.42% | 15.34% |
| Russell 2,000 | 1,791.51 | 0.61% | 1.85% |
| Crude Oil | 77.80 | -5.81% | -3.10% |
| US Treasury 10yr Yield | 3.57% |
Source: YCharts, Yahoo! Finance, WSJ
Market Recap
Mixed corporate earnings, political negotiations over the US debt ceiling and signs of a deteriorating US labor market contributed to a mixed week in equity markets. Worse-than-anticipated results from Tesla and AT&T, combined with a warning about the health of the US consumer from American Express in addition to a pick-up in both initial and continuing unemployment claims brought into-picture dual headwinds of slowing economic growth and a Fed that is anticipated to raise rates an additional 0.25% in early May. Overseas, European markets continued to push higher, and China’s GDP estimates beat forecasts and showed continued economic acceleration as it emerges from its “Covid zero” restrictions.
Next week will bring a slew of corporate earnings and important end-of-month reports to which the markets will pay close attention as it attempts to discern what the Fed will do at its May 3rd meeting. Current estimates favor a rate hike, with only a 14% probability of a pause. Looking out into the future, however, the market is pricing in two rate cuts by year-end.
What We’re Reading:
FT: Blackstone president warns market is overestimating chance of Fed rate cuts
Reuters: When will US hit its debt ceiling and what happens if country defaults
Chart of the Week:
Forward-looking manufacturing surveys in the U.S. have deviated from those in China. Strong GDP growth, credit expansion and lower rates are spurring optimism amongst Chinese manufacturers and very strong retail spending is supportive of continued economic expansion, while US indicators point to slower growth.
