A combination of factors resulted in a week of uneven, albeit positive, performance, in which cyclical and financial stocks rallied while technology, real estate, and utilities lagged.
The Standard & Poor’s 500 rose 0.79%, while the Dow Jones Industrial Average gained 1.20%. The Nasdaq Composite Index increased 0.29% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 2.08%.1,2,3
Stocks treaded water ahead of last week’s inflation data and the start of a new earnings season. Stocks rallied on a favorable March consumer inflation report, only to falter after the release of last month’s Federal Open Market Committee (FOMC) meeting minutes, which hinted at a potential recession later this year.
After reports of a more pronounced slowdown in producer prices on Thursday, stocks surged higher, with technology and communication services companies leading the charge. A weak retail sales number on Friday shaved the gains to close out the week.
Last week provided fresh insight into inflation, and the news was encouraging.
The Consumer Price Index (CPI) rose a very modest 0.1% in March, while the year-over-year increase in consumer prices was 5.0%, down from February’s 12-month rise of 6.0%. Declines aided the March report in groceries, gasoline, medical care, and utilities.4
The read on supplier prices was even more positive. The Producer Price Index (PPI), which many economists see as a signal of future consumer prices, declined 0.5%–the most significant monthly decline since 2020. The 12-month increase as of March was 2.7%, an easing from February’s year-over-year climb of 4.9%.5
I still think a recession is likely later this year. Banks are making it more difficult for families and businesses to borrow, which will slow the economy further. Student loans are going to be coming due again, which will pinch the budgets of millions. And the expiration of covid-related programs will also reduce economic activity.
However, there is no guarantee a recession will cause stock prices to go down very much or for very long. As inflation cools some companies will see increasing profits even if we are in a mild recession.
This Week: Key Economic Data
Tuesday: Housing Starts.
Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.
Friday: Purchasing Managers’ Index (PMI) Composite Flash.
Source: Econoday, April 14, 2023
This Week: Companies Reporting Earnings
Monday: The Charles Schwab Corporation (SCHW), M&T Bank Corporation (MTB).
Tuesday: Netflix, Inc. (NFLX), Bank of America Corporation (BAC), Johnson & Johnson (JNJ), Lockheed Martin Corporation (LMT), The Goldman Sachs Group, Inc. (GS) .
Wednesday: Tesla, Inc. (TSLA), IBM Corporation (IBM), Lam Research Corporation (LRCX), Abbott Laboratories (ABT), Morgan Stanley (MS), U.S. Bancorp (USB), United Airlines Holdings, Inc. (UAL).
Thursday: AT&T, Inc. (T), Blackstone, Inc. (BX), American Express Company (AXP), CSX Corporation (CSX), Union Pacific Corporation (UNP), D.R. Horton (DHI), Truist Financial Corporation (TFC).
Friday: The Procter & Gamble Company (PG), HCA Healthcare, Inc. (HCA), Freeport-McMoRan, Inc. (FCX), Regions FInancial Corporation (RF).
Source: Zacks, April 14, 2023
"We may encounter many defeats but we must not be defeated."
– Maya Angelou
Recordkeeping Tips for Small Business Owners
As a small business owner, your recordkeeping is of utmost importance. These records show your income, expenses, business transactions, and much more. You can choose whatever recordkeeping system you want if you and the IRS have the necessary information.
As a business owner, you will need to keep track of supporting documents such as:
Keeping your records well-organized will save you time, effort, and money.
*This information is not intended to substitute for specific individualized tax advice. We suggest you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
Take Time for Tea
Are you looking for a warm, cozy escape? Look no further than a cup of tea! A cup of chamomile tea even has some potential health benefits!
Here are just a few:
Make time for tea!
Two fathers and two sons shopped for computers at their local big box retailer. Each bought a PC, yet they purchased only three PCs in total. How could this be?
Last week’s riddle: I can’t walk, but at times I run, and I am challenging to hide. I am always with you. What am I? Answer: Your nose.
Herd of Scandinavian Horses, Iceland
Footnotes and Sources
2. The Wall Street Journal, April 14, 2023
3. The Wall Street Journal, April 14, 2023
4. The Wall Street Journal, April 12, 2023
5. The Wall Street Journal, April 13, 2023
6. IRS.gov, August 8, 2022
7. Medical News Today, March 21, 2023
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Weekly Market Insights: Lower inflation lifts spirits in uneven week.
April 17, 2023