Weekly Recap | May 1, 2023

April 24-28, 2023 Recap

Equities Rebound

Large Caps Perform Best
Broad market stocks were mostly higher last week as the busiest week of the first quarter earnings season boosted investor sentiment, especially among mega cap technology firms. With the earnings season now past the midway mark, overall S&P 500 first quarter earnings are now expected to contract around 3.4%, and according to FactSet that’s an improvement from the approximate 6% decline expected at the start of the season. Equity optimism was capped somewhat as economic data continued to signal a coming recession.

For the Week…
The S&P 500 gained 0.89%, finishing positive in three sessions last week, easily retracing its mild 0.09% prior week loss. The Dow Jones Industrial Average echoed, climbing 0.86% and the tech-heavy Nasdaq Composite advanced 1.28%. By market cap among Russell Indices, large caps gained 0.74% while small caps (-1.24%) backpedaled and mid caps (-0.32%) fell the least.

Consumer Sentiment Inches Higher
The University of Michigan’s final April reading of consumer sentiment was little changed at 63.5, matching expectations and up slightly from 62.0 in March. While edging higher, sentiment is still well below its past peak of 88.3 in 2021 and its pre-pandemic high of 101. Comparably, sentiment has improved from its all-time low of 50 last summer.

Cyclicals Outperform
Communication Services (+3.76%), Technology (+2.43%), and Real Estate (+1.52%) were the top performing S&P 500 sectors last week. Defensives lagged, including Utilities (-0.95%), Industrials (-0.62%), and Healthcare (-0.59%). Communication Services (+25.05% YTD) and Technology (+22.37% YTD) extended their year-to-date dominance this year.

Treasury Yields Little Changed
Financial markets are continuing to price in a 0.25% Fed rate hike at their policy meeting on May 3. The yield on benchmark 10-year yield Treasury notes ended the week near 3.45%, down 0.09% from the prior week close at 3.54%. 

The Latest from @CeteraIM

Personal Savings Rise

PCE Inflation Declines

New Home Sales Rise  

Economic Calendar

Monday, May 1
ISM Manufacturing PMI, Construction Spending.

Tuesday, May 2
JOLTS Job Openings, Factory Orders.

Wednesday, May 3
Mortgage Activity, Durable Mortgage Activity, ADP Private Payrolls, ISM Services PMI, FOMC Rate/Policy Decisions.

Thursday, May 4
Jobless Claims, Labor Productivity, U.S. Trade Deficit.

Friday, May 5
Nonfarm Payrolls, Unemployment Rate, Hourly Wages.

GDP missed expectations and slowed to +1.1% annualized in the first quarter (+2.0% expected, +2.6% prior). The Fed’s policies are slowing economic growth. Inflation is also moderating. While the Fed looks to raise rates this week, it will likely pause after that..

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}