Mid-Week Market Minute 4.19.23

Market Updates

Stocks Mixed; Investors Watch Earnings Reports

Global stocks were mixed this week as investors digested corporate earnings results in the U.S. along with key economic data overseas. In bonds, interest rates ticked higher as markets now anticipate another rate hike from the Federal Reserve at the next meeting on May 3. In the U.S., the yield on the 2-year Treasury note moved higher by about 15bps from 4.10% at the beginning of the week to 4.25% as of Wednesday.

In global economic news, higher-than-expected inflation in the United Kingdom weighed on sentiment, as inflation in the U.K. rose at an annual clip of 10.1%. Meanwhile, China GDP rose at a 4.5% pace in the first quarter, the highest level in a year and more than expectations for a 4% increase. In the U.S., declining housing starts and permits, along with a significant decline in MBA mortgage applications, continue to show weakening demand in the housing sector as the economy continues to slow. The initial estimate of first-quarter GDP will be reported next Thursday, April 27. The Atlanta Federal Reserve Bank’s GDP Now model estimate for real GDP growth in the first quarter of 2023 currently is 2.5%. This likely will represent the strongest quarter of growth for 2023, as Federal Reserve projections from the latest Fed minutes show an expectation of a 0.4% GDP growth for the year 2023.

Focus the rest of this week is on earnings, where investors are monitoring earnings reports for signs of how the Fed’s’ efforts to bring down inflation are affecting economic activity. While earnings results so far have proved resilient, traders are on the lookout for insight into how companies are holding up, paying close attention to financials after the bank failures last month that shook confidence in the financial sector.

Source: GSAM, CNBC, JPMorgan

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