Market Insights, May 2023

Monthly Market Roundup | U.S. Equities

Big Movers in May 2023

36%

Nvidia (NVDA). The semiconductor company guided revenue well above consensus as artificial intelligence (AI) fueled demand for its advanced processors.

32%

Advanced Micro Devices (AMD): The semiconductor company beat earnings and revenue estimates. It also benefited from optimism about AI.

29%

Broadcom (AVGO): The chipmaker benefited from enthusiasm toward the semiconductor space. It also received a multibillion-dollar contract from Apple.

42%

Advance Auto Parts (AAP): The retailer missed estimates and cut guidance, citing product mix and supply-chain problems.

35%

Paramount Global (PARA): The media company missed profit estimates and cut its dividend as streaming costs rose and advertising revenue fell.

32%

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

noInflation 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)
downFitch Puts U.S. AAA Rating on Negative WatchFitch 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)
upFed Officials Inch Toward Potential Rate PauseMinutes from the last Federal Reserve meeting suggested more policymakers may support keeping interest rates unchanged in June. (24/5)
up1st Quarter GDP Revised HigherThe 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 NameCurrent MonthExpirationNext Month1-Mon%
S&P 500 E-Mini (@ES)ESM23 (June) 16 Jun 23ESU23 (Sept) +0.3%
*S&P 500 E-Mini Micro (@MES) MESM23 (June) 16 Jun 23MESU23(Sept) +0.3%
Nasdaq-100 E-Mini (@NQ) NQM23 (June) 16 Jun 23NQU23 (Sept) +7.3%
*Nasdaq-100 E-Mini Micro (@MNQ) MNQM23 (June) 16 Jun 23MNQU23 (Sept) +7.3%
Dow Jones E-Mini (@YM) YMM23 (June) 16 Jun 23YMU23 (Sept) -3.7%
*Dow Jones E-Mini Micro (@MYM) MYMM23 (June) 16 Jun 23MYMU23 (Sept) -3.7%

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

Events to Watch This Month

DateEventWhat to watch
Thu, 1-JunADP Payrolls, ISM manufacturing Are there signs of an economic slowdown?
Fri, 2-JunNon-farm payrollsWill job growth weaken? Will unemployment and wages indicate slower inflation?
Tue, 13-JunConsumer price indexWill inflation continue to ease?
Wed, 14-JunFed meeting Interest-rate statement, projections for future policy, press conference.
Tue, 20-JunHousing starts, building permits Will strong demand for homes boost construction?

Sector Watch

  • Technology9%
  • Communications4%
  • Consumer Discretionary3%
  • S&P 5000%
  • Industrials3%
  • Health Care4%
  • Financials4%
  • Real Estate5%
  • Utilities6%
  • Consumer Staples6%
  • Materials7%
  • Energy10%
  • 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

05-May

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. Economy

15-May

Stocks 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 500

15-May

The 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 500

23-May

The 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 Rates

23-May

The 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. Economy



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