ND&S Weekly Commentary 4.10.23 – Markets Modestly Lower in Short Week

Equity markets were modestly lower during the holiday-shortened week amid signs that the US economy is losing steam.

For the week, the DJIA advanced 0.69% while the S&P 500 slipped 0.06%. The tech-heavy Nasdaq declined by 1.08% on the week. International markets were modestly higher last week as the MSCI ACWI Ex USA index gained 0.10%.  Small company stocks, represented by the Russell 2000, gave back 2.66%. Fixed income, represented by the Bloomberg Barclays Aggregate, had a strong week (up 0.49%) as rates declined across all time periods. As a result, the 10 YR US Treasury closed at a yield of 3.30% (down ~25bps from the previous week’s closing yield of 3.55%). Gold prices broke through a psychological resistance level last week to close at $2,002/oz. Oil (WTI) prices jumped higher to finish at $80.70/barrel as OPEC+ surprised the market with a 1.6 million barrel per day output cut.

The U.S. economy started 2023 off strong, with many Wall-Street economists calling for positive real GDP growth upwards of 3%. However, the Atlanta Fed GDPNow model now shows the U.S. economy forecasting Q1 real growth of only 1.5%, down from 3.5% two weeks ago. A sharp drop in the ISM manufacturing and nonmanufacturing PMIs, and a larger-than-expected decline in job openings in February were just some of the economic data misses last week.

Earnings season will kick off this week with several reports from the banking and consumer discretionary sectors. The financial reports and follow-up commentary from the banking sectors will be closely watched given the fallout from the SVB and Signature Bank failures a few weeks ago. Other important economic data releases this week include reports on inflation (both CPI and PPI) and retail sales for the month of March.

“Either you run the day or the day runs you.” – Jim Rohn