Weekly Market Insights: Stocks Rally As Attention Shifts to Fed's May Meeting

Strong earnings from several mega-cap technology companies offset renewed regional banking jitters and weak economic data, leaving stocks higher for the week.

The Dow Jones Industrial Average gained 0.86%, while the Standard & Poor’s 500 added 0.87%. The Nasdaq Composite index rose 1.28% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.60%.^1,2,3

Earnings Drive Rebound

It was a very busy week of earnings reports, but none more important than those from the Big Tech names. After two days of sharp losses on revived regional banking fears and otherwise lackluster earnings results, stocks rallied powerfully on a succession of positive earnings surprises from several mega-cap companies.

Also aiding the sentiment was last week’s first quarter Gross Domestic Product (GDP) report. Though the report showed muted economic growth that fell short of expectations, investors were encouraged by strong consumer spending.

Slowing Growth

In a sign that higher rates are slowing economic growth, first-quarter GDP slowed to a 1.1% annualized growth rate as healthy consumer spending helped offset a decline in business investment and a slowdown in nonresidential investment.

Economists had expected first-quarter GDP growth to come in at 2%. The business inventory investment slowdown reduced the headline GDP number by 2.26%.⁴

The initial estimate of GDP also reported some disappointing inflation news as the quarter-over-quarter Personal Consumption Expenditures Price Index, the Fed’s preferred inflation measure, rose 4.2%, which was higher than the 3.7% forecast.⁵

This Week: Key Economic Data

Monday: Institute for Supply Management (ISM) Manufacturing Index.

Tuesday: Factory Orders. Job Openings and Turnover Survey (JOLTS).

Wednesday: FOMC Announcement. Institute for Supply Management (ISM) Services Index.

Thursday: Jobless Claims.

Friday: Employment Situation. 

^{Source: Econoday, April 28, 2023
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Monday: Stryker Corporation (SYK), ON Semiconductor Corporation (ON).

Tuesday: Advanced Micro Devices, Inc. (AMD), Ford Motor Company (F), Pfizer, Inc. (PFE), Starbucks Corporation (SBUX), Marathon Petroleum (MPC).

Wednesday: CVS Health Corporation (CVS), Qualcomm, Inc. (QCOM), Albemarle Corporation (ALB), Barrick Gold Corporation (GOLD).

Thursday: Apple, Inc. (AAPL), Block, Inc. (SQ), Shopify, Inc. (SHOP), ConocoPhillips (COP), Booking Holdings, Inc. (BKNG), Regeneron Pharmaceuticals, Inc. (REGN),

Friday: Cigna Group (CI), EOG Resources, Inc. (EOG), Dominion Energy, Inc. (D),

^{Source: Zacks, April 28, 2023
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

"As you get older your willingness to tell more of the truth is awakened and you don't have to think about it or imagine it because now you know this to be true."

– Keith David

Tax Tips for Those in the Military

The Internal Revenue Service has certain special tax breaks and programs for members of the U.S. Armed Forces. Here are a few.

Earned Income Tax Credit
You may include nontaxable combat pay in your taxable income. Including it may boost your earned income tax credit, resulting in you owing less and potentially a larger refund.

Signing Joint Returns
As a rule, both spouses normally must sign a joint income tax return. If your spouse is absent due to military duty, you may be able to sign for your spouse. However, you may need a power of attorney to file a joint return.

Job Search
The Tax Cuts and Jobs Act suspended the deduction for moving and job search expenses for most taxpayers through January 1, 2026. This suspension does not apply to members of the Armed Forces on active duty who move under a military order related to a permanent change of station.

*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

Stay Healthy During Flu Season

Conventional wisdom is that flu season comes during Fall and Winter, but the truth is that it can vary wildly from year to year and region to region. Fortunately, you may reduce your risk this coming flu season with a few simple steps.

• Get the flu vaccination: The Centers for Disease Control estimates that fewer than half of all Americans got the flu vaccine last year. While getting the vaccine may not prevent you from getting a strain of the flu, it may help you avoid one of the other strains. This is especially important for anyone with a chronic health condition and those 65 and older.
• Wash your hands: Handwashing remains one of the most effective ways to prevent the flu. Wash your hands with soap and water for at least 20 seconds, and wash your hands often.
• Disinfect: Disinfect objects that you touch every day, like doorknobs, your car’s steering wheel, and other household items that you use regularly.

While this information should not substitute for medical advice from your healthcare provider, implementing better habits, like frequent handwashing, wearing a face mask, and avoiding anyone ill, may help you and your loved ones stay healthy this flu season.

Tip adapted from Centers for Disease Control⁷

Two sailors stand on opposite sides of a boat. One looks west, and the other looks east – yet, they can both see each other clearly. How can this be? 

Last week’s riddle: It can be told, made, cracked, and played, yet it is only spoken. What is it?  Answer: A joke.

Oryx Antelope in the Kalahari Desert, S. Africa

Footnotes and Sources

^{1. The Wall Street Journal, April 28, 2023}

^{2. The Wall Street Journal, April 28, 2023}

^{3. The Wall Street Journal, April 28, 2023}

^{4. CNBC, April 27, 2023}

^{5. CNBC, April 27, 2023}

^{6. IRS.gov, 2023}

^{7. Centers for Disease Control, February 7, 2023} 

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

^{U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.}

^{International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.}

^{Please consult your financial professional for additional information.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

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