Markets “In a Nutshell” for May 2, 2022
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 2.50%, the S&P 500 was down 3.30%, and the NASDAQ fell 3.90%. Foreign stocks (MSCI EAFE) were up, rising 3.30%. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 2.93%. (Data source: Wall Street Journal)
GDP (gross domestic product) declined by 1.4% in the first quarter showing a contraction in the 1st quarter of the US economy. Some reasons for the decline were exports slowing and imports increasing, a decline in inventory spending, and a slowdown in government spending as we move further from pandemic spending. Although this number was a surprise the market did not have much reaction to the news. Consumer spending however did continue to grow as well as business investment. A continued drag on GDP going forward could be the increase in imports and the decline in exports. This is in reaction to the war going on in Europe and other geopolitical worries around the world.
Last week more than 1/3 of S&P 500 companies reported earnings and many of them are seeing pressures in their business as there are many uncertainties. This is the first time we have seen disappointing earnings from some of the large mega-cap companies since the pandemic such as Amazon falling more than 15% after they reported. Many companies are talking about the increase in costs, how hard it is to find labor, and the continued supply chain struggles to worsen as the geopolitical environment continues to be shaky. Companies have continued to give guidance showing earnings could continue to grow 5% to 10% this year but everyone is expecting a slower increase than what we have recently seen due to less government spending and increasing costs to the consumer.
The S&P 500 was down 13.3% at the end of April, when was the last time we saw a worst start to the year? (Scroll Down for Answer)
Have a Great Week!
4. 1939. This was the worst start to the year for the S&P 500 since 1939 when the S&P 500 fell 17.3%. This was also the worst start for the NASDAQ since its inception in 1971.