Big Movers In April 2023
Chipotle Mexican Grill (CMG). The burrito chain beat estimates as traffic accelerated and comparable sales surprised to the upside.
First Republic Bank (FRC): The regional lender, already bruised from March's bank failures, fell after losing deposits and attempting to unload up to $100 billion of assets.
Intuitive Surgical (ISRG): The medical-device company jumped to its highest level in a year after earnings and revenue beat forecasts.
Enphase Energy (ENPH): The solar-energy stock issued weak revenue and margin guidance as demand slowed.
Eli Lilly (LLY): The pharmaceutical stock climbed to a new record high on optimism about its potential Alzheimer's drug, which is undergoing late-stage trials.
Tesla (TSLA): The electric-car maker missed forecasts as CEO Elon Musk cut prices and reduced profitability to gain long-term market share.
Key Economic Events Last Month
Unemployment Rises as Labor Pressures Ease
Job and wage growth in March matched estimates. Unemployment rose more than expected as Americans returned to the labor force. It suggested inflationary pressures may have peaked. (7/4)
Inflation Data Lower Than Forecast
Consumer and wholesale prices rose less than expected in March. Drops in the cost of energy and services helped drive the slowdown. (12/4 & 13/4)
Retail Sales Fall More than Expected
Retail sales fell 1% in March, more than twice the forecast decline. Auto-related weakness led the drop, along with building materials and electronics. The news spurred worries about a potential recession. (14/4)
Are Leading Indicators Signaling a Recession?
Leading economic indicators fell 1.2% in March, triple the decline projected by economists. The reading was the lowest since November 2020 and may signal a recession is coming, according to the Conference Board. (20/4)
Key Futures Contracts
| Product Name | Current Month | Expiration | Next Month | 1-Mon% |
|---|---|---|---|---|
| S&P 500 E-Mini (@ES) | ESM23 (June) | 16 Jun 2023 | ESU23 (Sept) | +1.3% |
| *S&P 500 E-Mini Micro (@MES) | MESM23 (June) | 16 Jun 2023 | MESU23(Sept) | +1.3% |
| Nasdaq-100 E-Mini (@NQ) | NQM23 (June) | 16 Jun 2023 | NQU23 (Sept) | +0.2% |
| *Nasdaq-100 E-Mini Micro (@MNQ) | MNQM23 (June) | 16 Jun 2023 | MNQU23 (Sept) | +0.2% |
| Dow Jones E-Mini (@YM) | YMM23 (June) | 16 Jun 2023 | YMU23 (Sept) | +2.2% |
| *Dow Jones E-Mini Micro (@MYM) | MYMM23 (June) | 16 Jun 2023 | MYMU23 (Sept) | +2.2% |
* Micro contracts are one-tenth the size of standard e-minis.
Events to Watch This Month
| Date | Event | What to Watch |
|---|---|---|
| Wed, 3-May | Federal Reserve meeting | Interest-rate statement at 2pm E.T., followed by a press conference 30 minutes later. |
| Fri, 5-May | Non-farm payrolls | Will job growth weaken? Will unemployment and wages indicate slower inflation? |
| Wed, 10-May | Consumer price index | Will inflation, especially shelter costs, slow? |
| Tue, 16-May | Retail sales | Will consumer activity confirm recessionary fears? |
| Wed, 24-May | Fed minutes | Minutes from the last meeting may provide clues about policymakers’ interest-rate plans. |
Sector Watch
Consumer Staples rose as investors positioned for slower economic growth. Companies like Procter & Gamble and Coca Cola also reported strong earnings.
Communications stocks advanced as strong quarterly results lifted companies like Meta Platforms, Comcast and Alphabet.
Financials rebounded from sharp drops in March, when Silicon Valley Bank failed.
Industrials declined the most as weaker economic data caused investors to avoid cyclical stocks.
Noteworthy Calls & Predictions
Inflation is going to “drop hard” because rents are falling, according to Starwood Capital CEO Barry Sternlicht. The billionaire real estate investor blamed lags in government data and predicted the slowdown will appear in headline inflation this summer. Speaking on CNBC, he added the economy may enter a “serious recession.”
Inflation & economyCommercial real estate faces a double threat of office vacancies and higher interest rates, according to Morgan Stanley. More than half of commercial mortgages will need to be refinanced with interest rates about 4 percentage points higher. The investment bank added values may decline as much as 40%, more than the Great Financial Crisis.
Commercial real estateThe S∓P 500 could rally more than 10% to 4,625 this year, according to Piper Sandler technician Craig Johnson. He said bearish trendlines have been violated and added that bearish sentiment is widespread.
S&P 500A record 69% of the U.S. public has a negative view about the economy, according to a poll by CNBC. Less than one-quarter viewed stocks as an attractive investment. Inflation was the biggest worry.
EconomyStocks could have a “summer rip” following a May pullback, according to Bank of America analyst Stephen Suttmeier. He cited falling volatility and potentially bullish divergence on the Dow Jones Transportation Average.
S&P 500Disclosure
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