Stocks remained resilient last week amid mixed earnings reports, hawkish Fed-speak, and lingering recession fears, closing out the five trading days with small losses.
The Standard & Poor’s 500 lost 0.10%, while the Dow Jones Industrial Average slipped 0.23%. The Nasdaq Composite index fell 0.42% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, added 0.10%.1,2,3
Stocks Hold Firm
Stocks traded most of last week around the flatline as investors grappled with several headwinds.
The first was disappointing earnings results, coupled with the absence of earnings guidance from some companies due to an uncertain economic climate. Weak economic data, including declines in housing and leading economic indicators, also weighed on investor sentiment. Finally, multiple Fed officials spoke last week, signaling that inflation remained too high and that further rate hikes may be likely.
Underneath the seemingly placid surface of the major market indices, there was substantial price action at the individual stock and sector levels. Poor earnings results hit communication services stocks and regional banks, while margin pressures put pressure on auto stock valuations.
My suspicion that non-US markets were undervalued has so far borne some fruit, with the broad ex-US developed markets index out-performing the broadest of the three US indexes (the S&P 500) so far this year.
Two housing reports reflected ongoing fragility in the housing market and fed prevailing economic slowdown worries.
Sales of new homes fell 0.8% in March, dragged down by a 5.2% slide in new multi-family home construction. Sales of single-family homes were a bright spot, rising 2.7% to a three-month high, though that hopeful note was tempered by an 8.8% drop in new application permits–an indicator of future new home building.4
Existing home sales also suffered a month-over-month decline in March, falling 2.4%. Sales plummeted 22% from March 2022 levels as higher mortgage rates and tight inventories impacted affordability.5
Here's the thing to remember about housing: it's really hard to make prices go down. First, the supply will dry up. Sellers will just decide not to move if they can't get what they want for their house, and builders will stop building.
This Week: Key Economic Data
Tuesday: Consumer Confidence. New Home Sales.
Wednesday: Durable Goods Orders.
Thursday: Gross Domestic Product (GDP). Jobless Claims.
Friday: Personal Income and Outlays. Consumer Sentiment.
Source: Econoday, April 21, 2023
This Week: Companies Reporting Earnings
Monday: The CocaCola Company (KO).
Tuesday: Microsoft Corporation (MSFT), General Electric Company (GE), Verizon Communications, Inc. (VZ), Visa, Inc. (V), Alphabet, Inc. (GOOGL), General Motors Company (GM), McDonald’s Corporation (MCD), Ameriprise Financial, Inc. (AMP), 3M Company (MMM), Texas Instruments, Inc. (TXN), United Parcel Service, Inc. (UPS), PepsiCo, Inc. (PEP), NextEra Energy, Inc. (NEE), Spotify Technology (SPOT), Kimberly-Clark Corporation (KMB).
Wednesday: The Boeing Company (BA), ServiceNow, Inc. (NOW), Thermo Fisher Scientific, Inc. (TMO), General Dynamics Corporation (GD), eBay, Inc. (EBAY), Boston Scientific Corporation (BSX), Norfolk Southern Corporation (NSC).
Thursday: Amazon.com, Inc. (AMZN), Intel Corporation (INTC), AbbVie, Inc. (ABBV), Mastercard, Inc. (MA), Bristol Myers Squibb Company (BMY), Caterpillar, Inc. (CAT), Merck & Co., Inc. (MRK), The Southern Company (SO), Eli Lilly and Company (LLY), Northrop Grumman Corporation (NOC), Comcast Corporation (CMCSA).
Friday: Exxon Mobil Corporation (XOM), Chevron Corporation (CVX), Charter Communications, Inc. (CHTR).
Source: Zacks, April 21, 2023
"It has always been easy to hate and destroy. To build and to cherish is much more difficult."
– Queen Elizabeth II
Tax Benefit and Credits: FAQs for Retirees
Lots of questions can come up about income taxes after retirement. Listed are answers to just a few common questions from retired taxpayers.
What types of income are taxable?
What types of income are non-taxable?
Why is my pension taxed?
*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
Psychologists have defined gratitude as a positive emotional response to receiving a benefit from someone or something. In positive psychology, gratitude is the human way of acknowledging the good things in life. Thankfully, you can learn gratitude if it does not come innately.
There are benefits to practicing gratitude, especially in times of stress and uncertainty. Gratitude invites positive emotions that can have physical benefits through the immune or endocrine systems. Research shows that when we think about what we appreciate, the parasympathetic or calming part of the nervous system is triggered, which can have protective benefits for the body—including decreasing levels of the stress hormone cortisol and increasing oxytocin, the bonding hormone involved in relationships that make us feel good.
There are a few great ways to get started today and practice gratitude in your own life:
Tip adapted from Mindful.org7
It can be told, made, cracked, and played, yet it is only spoken. What is it?
Last week’s riddle: 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? Answer: The shoppers were a man, his son, and his grandson.
Pura Ulun Danu Bratan, Bali, Indonesia
Footnotes and Sources
2. The Wall Street Journal, April 21, 2023
3. The Wall Street Journal, April 21, 2023
4. YahooFinance, April 18, 2023
5. CNBC, April 20, 2023
6. IRS.gov, 2023
7. Mindful.org, February 7, 2023
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Weekly Market Insights: Stocks show small losses after mixed week
April 24, 2023