THE WEEK ON WALL STREET
Stocks spent last week digesting the sharp gains of previous weeks as investors
assessed a tightening yield curve, the war in Ukraine, and an uncertain outlook for
economic growth and inflation. The Dow Jones Industrial Average slipped 0.12%,
while the Standard & Poor’s 500 was flat (+0.06%). The Nasdaq Composite index
led, picking up 0.65% for the week. The MSCI EAFE index, which tracks developed
overseas stock markets, rose 1.02%.
Stock prices bounced around following strong gains in two previous weeks as money
managers appeared to reposition their portfolios ahead of the first-quarter close. Oil
was under pressure all week as prices fell on news that Shanghai imposed a strict
lockdown due to COVID infections. President Biden announced a sustained release
of oil from the country’s strategic petroleum reserve. Bond yields reversed their
recent climb. The flattening in the yield curve triggered some concerns about
economic growth and the possibility of a recession.
With economic growth worries overhanging the market, last week’s employment
reports showed continued strong demand for workers. The Job Openings and Labor
Turnover Survey reported the number of open positions remained near record
highs, with job openings exceeding the number of available workers by a record five
million. Afterward, the Automated Data Processing employment report saw private
payrolls grow by 455,000 in March, slightly above consensus expectations. Finally,
the government’s monthly jobs report showed that employers added 431,000 jobs
in March, lowering the unemployment rate to 3.6%. That’s approaching the 50-year
low of 3.5% reached in February 2020.
THE WEEK AHEAD: KEY ECONOMIC DATA
Monday: Factory Orders.
Tuesday: Institute for Supply Management (ISM) Services Index.
Wednesday: Federal Open Market Committee (FOMC) Minutes.
Thursday: Jobless Claims.
THE WEEK AHEAD: NOTABLE COMPANIES REPORTING EARNINGS
Wednesday: Levi Strauss & Co. (LEVI).
Thursday: Conagra Brands (CAG).
There is still a lot of negative news flow yet the market has been fairly
resilient. Some think we may have seen the low for the year, while others are calling
for lower prices. While there are headwinds we are facing (but inn’t there always
some headwind and negative news?) there are some tailwinds like low
unemployment and COVID in the U.S. is beginning to wane. It must be exciting to
be a hotel operator near Disney after the past few years. I hear they are at capacity
most of the time. Earnings reports will start again in heavy fashion in a few weeks,
which will probably give some additional insight into how the consumer is holding
up. Stay tuned…