Stock prices got hit hard last Friday, with the Dow falling over 900 points (2.7%) and the NASDAQ declining over 4% – putting the major stock market averages into the red for the week. For the week in total – the Dow Jones Industrial Average fell 2.5%, the NASDAQ Composite shed 3.9%, and the Standard & Poor’s 500 Index declined 3.3%. For the month of April, the S&P declined 8.8% and the NASDAQ plunged over 13%.
The stock market remains pressured by major negative factors including high inflation, rising interest rates, the war in Ukraine, and Covid related issues/lockdowns in China. Additionally, an earnings report from Amazon that missed expectations, along with some cautionary forward commentary from Apple, further weighed on market sentiment. This laundry list is outweighing a generally positive earnings season.
For the first quarter of 2022, with 55% of S&P 500 companies reporting actual results, 80% have reported a positive EPS (Earnings Per Share) surprise and 72% of companies have reported a positive revenue surprise, both of which are above the 5-year average – according to FactSet Research.
Looking to the week ahead, we’ll get another long list of earnings reports, and word from the Federal Reserve on monetary policy. Major companies reporting this week include Advanced Micro Devices, Biogen, Pfizer, Clorox, Starbucks, CVS Health, Uber Technologies, Kellogg, Under Armour, and Moderna.
It is almost certain the Fed will be hiking rates by one-half percent at this week’s policy meeting. According to the CME Fedwatch Tool, the probability of a ½ percent rate hike stands at 99.8 %. The week concludes with the April Jobs Report on Friday morning. Expectations are the U.S. economy added about 375,000 jobs and the unemployment rate held steady at 3.6 percent.
With several major and volatile issues facing the financial markets right now, we expect market volatility to continue. While unpleasant and painful, Corrections and Bear Markets are a normal and inherent part of investing. As always, feel free to contact us with any questions you may have or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC