Mid-Week Market Minute 05.25.22

Market Updates

Stocks resumed their downward trajectory alongside elevated volatility as markets digested softer-than-expected data on the economic front. Shares of Snapchat’s parent company, Snap, plummeted on Tuesday after the company cautioned investors they likely would miss top and bottom-line earnings guidance amid a weaker macroeconomic environment. This spilled into the broader market in general, with technology selling off across the board. In financials, shares of JPMorgan rallied following upbeat comments regarding the state of the economy and positive net interest income guidance.

On the data front, preliminary April readings showed durable goods orders and core capital goods orders increased by slightly less than expected, while March numbers were revised lower. The Richmond Fed manufacturing index fell in May, significantly below consensus expectations for a modest decline. The composition of the report was weak, as the shipments, new orders, and employment components all decreased. In housing, sales of new single-family homes decreased by 16.6% in April to the lowest level since April 2020 and well below pre-pandemic levels.

For the remainder of the week, investors will have plenty to chew on. The Federal Reserve is slated to release May meeting minutes on Wednesday afternoon, where investors will take a close look to the report for details on the future path of monetary tightening. Recently, Fed Chair Jerome Powell stated the central bank would not hesitate to take rates above neutral, if warranted, to tame inflation. Additionally, market participants will scan the release for insights into policymakers’ expectations for the impact on quantitative tightening, as they work to reduce their nearly $9 trillion balance sheet. Interest rates rallied ahead of the release, with the yield on the 10-year Treasury note trading around 2.76% mid-week.

Source: GSAM, CNBC, JPMorgan