Stocks posted losses in a holiday-shortened trading week as the first-quarter earnings season kicked off and investors digested new inflation data.
The Standard & Poor’s 500 fell 2.13%, while the Dow Jones Industrial Average declined 0.78%. The Nasdaq Composite index dropped 2.63% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 1.20%.1,2,3
Stocks began the week moving lower as bond yields climbed higher, with growth stocks suffering some of the steepest declines. Investors considered China’s ongoing lockdown warily, worried it might worsen supply-chain issues.
Historically high consumer and producer price inflation reports were shrugged off by the stock and bond markets in the main, with bond yields slipping despite the hot inflation numbers. Despite an encouraging start to the first-quarter earnings season, stocks pulled back on Thursday as bond yields resumed their move higher ahead of a three-day holiday weekend.
An Eye on Inflation
Good grief, I hate the way the media sensationalizes everything in order to scare people.
CNBC reported that on Tuesday, March’s Consumer Price Index (CPI) report offered little indication that inflation may be moderating, as prices increased 8.5% year-over-year, the fastest pace in 40 years. Core inflation, excluding food and energy prices, "recorded a 6.5% jump, [emphasis added] the steepest rise since August 1982." One encouraging note was that core inflation showed potential signs of ebbing, posting a monthly increase of 0.3% versus expectations of a 0.5% increase.4
Seriously? That 6.5% change happened over the course of a year. How can you call something that tales place over a year a "jump?" The only new data is the good news: the monthly increase was 0.3% vs. an expected 0.5% and the lowest monthly increase in 6 months. This is the exact opposite of the first sentence and in fact offers a good indication that inflation may be moderating. One month does not make a trend, but if core inflation remains at 0.3% next month that would be very good news. (I'm not making a prediction either way!)
The following day, March’s Producer Price Index, a potential insight into future inflation, rose 11.2% year-over-year. A March survey by the National Federation of Independent Business released earlier in the week, indicated that half of the respondents were likely to raise prices in the next three months.5
As you can see above, all interest rates are up from a month ago and from a year ago. I want to focus on the 30 Year Mortgage which is up 25.5% in 1 month. I expect this number to keep going up rapidly, which will depress home prices and help to slow inflation.
This Week: Key Economic Data
Tuesday: Housing Starts.
Wednesday: Existing Home Sales.
Thursday: Jobless Claims. Index of Leading Economic Indicators.
Friday: Purchasing Managers’ Index (PMI) Composite Flash.
Source: Econoday, April 14, 2022
This Week: Companies Reporting Earnings
Monday: Bank of America Corporation (BAC), J.B. Hunt Transport Services, Inc. (JBHT).
Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), International Business Machines Corporation (IBM), Lockheed Martin Corporation (LMT), Prologis, Inc. (PLD).
Wednesday: Tesla, Inc. (TSLA), The Procter & Gamble Company (PG), Lam Research Corporation (LRCX), CSX Corporation (CSX).
Thursday: AT&T, Inc. (T), United Airlines Holdings, Inc. (UAL), Snap, Inc. (SNAP), Blackstone, Inc. (BX), Union Pacific Corporation (UNP), Dow, Inc. (DOW).
Friday: Verizon Communications, Inc. (VZ), American Express Company (AXP), KimberlyClark Corporation (KMB).
Source: Zacks, April 14, 2022
"You can’t use up creativity. The more you use, the more you have."
– Maya Angelou
Electronic Filing Options for Military Families
The Internal Revenue Service (IRS) offers a number of online resources for military members and their families. Some of these resources include:
* This information is not intended to be a substitute for specific, individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
Easy Herbs to Grow Inside
Spring is in the air! Even if you don’t have a green thumb, these herbs are super easy to grow inside. Herbs add a little greenery to your home and are healthy and delicious. A win-win!
Here are some of the easiest herbs to grow inside:
When planning out your indoor herb garden, you may need to separate the herbs into their own containers because they each have different watering schedules and sunlight requirements. Thyme, rosemary, and oregano enjoy much less water than basil, for example. Once you know a little bit about the care of each herb, your garden will thank you.
Tip adapted from Gardeners.com7
How much dirt is in a 2-foot diameter hole that is 4 feet deep?
Last week’s riddle: When you take away the whole from this, you still have some leftover. What is it? Answer: Wholesome.
Magstræde Street, Copenhagen, Denmark
Footnotes and Sources
2. The Wall Street Journal, April 14, 2022
3. The Wall Street Journal, April 8, 2022
4. CNBC, April 12, 2022
5. The Wall Street Journal, April 13, 2022
6. IRS.gov, February 25, 2021
7. Gardeners.com, April 9, 2021
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Weekly Market Insights: Earnings Season Begins
April 18, 2022