Markets “In a Nutshell” for April 24, 2023
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 0.20%, the S&P 500 was down 0.1%, and the NASDAQ fell 0.40%. Foreign stocks (MSCI EAFE) were up, rising 0.1%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 3.57%. (Data source: Wall Street Journal)
Economic Strengths and Weaknesses
The economy continues to expand as Q4 2022 GDP grew by 2.6% after adjusting for inflation and estimates are 2.5% growth for Q1 of 2023. The strength of the economy has been the consumer as personal income continues to be strong and the consumer has continued to spend. Although job gains have slowed, they are still positive, and unemployment is still historically low. Despite the current jobs market, the number of jobless claims has now increased for 6 consecutive months after bottoming in September. The leading economic index moved lower in March and is now at its lowest level since November 2020. Although the baking sector has seemed to stabilize since the SVB collapse, credit conditions have tightened as banks are less likely to loan out money as they were prior to the collapse.
Companies have begun to report earnings for Q1, and a lot of attention had been on the banking sector after the issues that occurred in Q1. So far, the banks have held up as earnings did now show any significant move in deposit outflows and profit margins. This upcoming week will be important as 1/3 of the S&P 500 is set to report earnings, including some big tech companies such as Amazon, Alphabet, Meta, and Microsoft. Estimates for 2023 earnings have also come down as now estimates are there will be no earnings growth for the S&P 500 in 2023. Although this is not a good sign, it does show the market is already pricing in no earnings growth so even a slight growth for earnings in 2023 could send the market higher. Earnings could also be a factor in the Fed’s decision on rates as we will get a more up-to-date picture of consumer spending.
As of February of 2023, how much Federal debt does the US have? (Scroll Down for Answer)
Have a Great Week!
1) $31.5 trillion. The US debt continues to climb as talks about budget and the debt ceiling in Washington heat up. Current projections show that the 2023 Federal deficit will be $1.4 trillion and on average will be $2 trillion per year in the next decade.