Markets “In a Nutshell” for May 1, 2023
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 0.90%, the S&P 500 was up 0.9%, and the NASDAQ rose 1.30%. Foreign stocks (MSCI EAFE) were down, falling 0.1%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.42%. (Data source: Wall Street Journal)
Markets in Summer Months
There is an old adage that says, “Sell in May and go away”, but is that good advice? When looking at the past 40 years the stock market has averaged a 3.2% return from May to August. The market has also been higher in 75% of those summer periods and in 2020 the market was up 21% in just those summer months which is the best return in the past 40 years for that period. May also tends to be an indicator of the summer months as in the past 40 years May has logged a positive return 71% of the time and when May has a positive return, 88% of the time the whole summer is positive. So, despite “sell in May and go away” having a nice ring to it, this would not be considered the best advice when looking at historical data for the market.
Economy Continues to Slow
Last week the latest GDP report showed that the economy grew 1.1% in Q1 2023 compared to 2.6% in Q4 of 2022 and 3.2% in Q3 of 2022. This data confirms that the economy is slowing, and a recession could be on the horizon if the data continues to trend in this direction. Although the labor market is still strong, we are also seeing that weaken as jobless claims have been ticking up while job openings have been coming down. Earnings for S&P 500 companies have also declined by 1.7% for Q1 despite revenue being up 4%. This is due to higher expenses companies are having to pay including labor costs which is giving the consumer more spending money. Household spending increased 3.7% last quarter which is the largest growth since Q2 2021. If we see unemployment rise, the consumer will not be able to spend as they are which could lead to a deeper recession than most are expecting.
Job openings are now under 10 million, when was the most recent time this happened? (Scroll Down for Answer)
Have a Great Week!
4. May 2021, the last time job openings fell below 10 million was in May of 2021. Although we still see a large number of job openings currently compared to historical data, there is still some worry because of the fall we have seen at the same time jobless claims are going up.