Market Insights, April 2023

Monthly Market Roundup | U.S. Equities

Big Movers in April 2023

21%

Chipotle Mexican Grill (CMG). The burrito chain beat estimates as traffic accelerated and comparable sales surprised to the upside.

18%

Intuitive Surgical (ISRG): The medical-device company jumped to its highest level in a year after earnings and revenue beat forecasts.

15%

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.

75%

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.

22%

Enphase Energy (ENPH): The solar-energy stock issued weak revenue and margin guidance as demand slowed.

21%

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

noUnemployment Rises as Labor Pressures EaseJob 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)
upInflation Data Lower Than ForecastConsumer 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)
downRetail Sales Fall More than ExpectedRetail 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)
downAre 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 NameCurrent MonthExpirationNext Month1-Mon%
S&P 500 E-Mini (@ES)ESM23 (June)16 Jun 23ESU23 (Sept) +1.3%
*S&P 500 E-Mini Micro (@MES)MESM23 (June)16 Jun 23MESU23(Sept) +1.3%
Nasdaq-100 E-Mini (@NQ)NQM23 (June) 16 Jun 23NQU23 (Sept) +0.2%
*Nasdaq-100 E-Mini Micro (@MNQ)MNQM23 (June) 16 Jun 23MNQU23 (Sept) +0.2%
Dow Jones E-Mini (@YM)YMM23 (June) 16 Jun 23YMU23 (Sept) +2.2%
*Dow Jones E-Mini Micro (@MYM)MYMM23 (June) 16 Jun 23MYMU23 (Sept) +2.2%

* Micro contracts are one-tenth the size of standard e-minis.

Events to Watch This Month

DateEventWhat to watch
Wed, 3-MayFederal Reserve meeting Interest-rate statement at 2pm E.T., followed by a press conference 30 minutes later.
Fri, 5-MayNon-farm payrollsWill job growth weaken? Will unemployment and wages indicate slower inflation?
Wed, 10-MayConsumer price indexWill inflation, especially shelter costs, slow?
Tue, 16-MayRetail sales Will consumer activity confirm recessionary fears?
Wed, 24-MayFed minutesMinutes from the last meeting may provide clues about policymakers’ interest-rate plans.

Sector Watch

  • Consumer Staples4%
  • Communications3%
  • Financials3%
  • Health Care3%
  • Energy3%
  • Utilities2%
  • S&P 5001%
  • Real Estate1%
  • Technology0%
  • Materials0%
  • Consumer Discretionary1%
  • Industrials1%
  • 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

04-April

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 & economy

04-April

Commercial 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 estate

12-April

The 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 500

18-April

A 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.

Economy

25-April

Stocks 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 500



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