Big Movers In May 2023
Nvidia (NVDA). The semiconductor company guided revenue well above consensus as artificial intelligence (AI) fueled demand for its advanced processors.
Advance Auto Parts (AAP): The retailer missed estimates and cut guidance, citing product mix and supply-chain problems.
Advanced Micro Devices (AMD): The semiconductor company beat earnings and revenue estimates. It also benefited from optimism about AI.
Paramount Global (PARA): The media company missed profit estimates and cut its dividend as streaming costs rose and advertising revenue fell.
Broadcom (AVGO): The chipmaker benefited from enthusiasm toward the semiconductor space. It also received a multibillion-dollar contract from Apple.
Newell Brands (NWL): The junk-rated maker of consumer products missed profit forecasts and cut its dividend as revenue continued to fall.
Key Economic Events Last Month
Inflation Drops Under 5%
The Consumer Price Index rose slightly less than 5% between April 2022 and April 2023. It was the smallest increase in almost two years. (10/5)
Fitch Puts U.S. AAA Rating on Negative Watch
Fitch Ratings put the AAA long-term credit rating of the U.S. on negative watch after lawmakers balked at raising the debt ceiling. The rating agency cited political brinksmanship and lack of fiscal reforms. (24/5)
Fed Officials Inch Toward Potential Rate Pause
Minutes from the last Federal Reserve meeting suggested more policymakers may support keeping interest rates unchanged in June. (24/5)
1st Quarter GDP Revised Higher
The U.S. Commerce Department boosted its reading of economic growth in the first quarter to 1.3% from 1.1%. Stronger private inventories accounted for the higher gross domestic product (GDP). (25/5)
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) | +0.3% |
| *S&P 500 E-Mini Micro (@MES) | MESM23 (June) | 16 Jun 2023 | MESU23 (Sept) | +0.3% |
| Nasdaq-100 E-Mini (@NQ) | NQM23 (June) | 16 Jun 2023 | NQU23 (Sept) | +7.3% |
| *Nasdaq-100 E-Mini Micro (@MNQ) | MNQM23 (June) | 16 Jun 2023 | MNQU23 (Sept) | +7.3% |
| Dow Jones E-Mini (@YM) | YMM23 (June) | 16 Jun 2023 | YMU23 (Sept) | -3.7% |
| *Dow Jones E-Mini Micro (@MYM) | MYMM23 (June) | 16 Jun 2023 | MYMU23 (Sept) | -3.7% |
* Micro contracts are one-tenth the size of standard e-minis.
Events to Watch This Month
| Date | Event | What to Watch |
|---|---|---|
| Thu, 1-Jun | ADP Payrolls, ISM manufacturing | Are there signs of an economic slowdown? |
| Fri, 2-Jun | Non-farm payrolls | Will job growth weaken? Will unemployment and wages indicate slower inflation? |
| Tue, 13-Jun | Consumer price index | Will inflation continue to ease? |
| Wed, 14-Jun | Fed meeting | Interest-rate statement, projections for future policy, press conference. |
| Tue, 20-Jun | Housing starts, building permits | Will strong demand for homes boost construction? |
Sector Watch
Technology surged as investors looked for artificial intelligence to drive a new wave of growth.
Communications stocks advanced, also lifted by AI and hopes of stronger results.
Consumer discretionaries rebounded as investors returned to large-cap growth companies like Amazon.com and Tesla.
Energy declined the most as crude-oil prices hit their lowest level in over a year.
Noteworthy Calls & Predictions
The U.S. will avoid a recession this year, according to Goldman Sachs Chief Economist Jan Hatzius. He said the “very resilient” labor market is supporting real incomes and offsetting tighter credit conditions. Hatzius also thinks the Fed will pause interest-rate hikes, with the potential for cuts in 2024.
U.S. EconomyStocks may keep rising as the Fed stops raising interest rates, according to hedge fund manager Paul Tudor Jones. He cited 12 consecutive monthly declines in inflation, adding that investors have significant cash on the sidelines.
S&P 500The S&P 500 may exceed 4,600 this year, according to Piper Sandler strategist Craig Johnson. He cited high levels of negativity, despite major indexes breaking last year’s downtrends.
S&P 500The Fed is done hiking rates for now, according to Morgan Stanley bond manager Jim Caron. He said previous rate hikes still need time to take effect. Caron, speaking on CNBC, doesn’t yet anticipate rate cuts.
Interest RatesThe U.S. economy is in better shape than most people think, according to Rick Rieder, head of fixed income at BlackRock. He rejected talk of a slowdown, citing excess savings and healthy spending. Rieder, who oversees $2.4 trillion of assets, said a recession is “almost impossible” given the low unemployment rate.
U.S. EconomyDisclosure
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