Market Look – Monday Morning Market Memo – May 8, 2023

Market Look – Monday Morning Market Memo – May 8, 2023

All three major stock market averages rallied strongly on Friday, snapping four consecutive days of losses. The Dow Jones Industrial Average rose nearly 550 points (or 1.7%), the NASDAQ Composite jumped 2.2%, while the Standard & Poor’s 500 Index climbed 1.9%. For the week in total, the Dow fell 1.2% to 33,674 – the NASDAQ ticked up .1% to 12,235 – the S&P dropped .8% to 4,136.

Key factors moving the market last week, (in chronological order), included a Federal Reserve policy decision, earnings from Apple, and the April Jobs Report.

The Federal Reserve, as widely expected, raised interest rates by ¼ point (their 10th interest rate increase in just over a year). Noteworthy from their meeting, the Fed removed previous wording “the Committee anticipates that some additional policy firming” may be appropriate. Instead, they are now “determining” whether future rate increases are appropriate. Chair Powell stated this is a “meaningful change” and markets took this as an indicator the current tightening cycle may likely be over.

Apple, in what was by far the most watched earnings report last week, beat estimates for both earnings and revenues. Further, the company announced a 4% dividend hike and an additional stock buyback program. The stock responded with a gain of 4.7%.

The April Jobs Report also came in ahead of estimates. The U.S. Bureau of Labor Statistics reported the economy added 253,000 jobs last month, compared to expectations for a gain of 180,000. The unemployment rate improved a notch to 3.4 percent. The strong jobs report was welcome news, improving investor sentiment, and rekindling hope the economy may be lining up for a “soft landing” or mild recession, as opposed to a more severe recession.

Looking to the week ahead, market attention will be focused on fresh inflation data. The consumer price index is due out on Wednesday, followed by the producer price index Thursday. Inflation numbers are extremely important in determining Federal Reserve monetary policy. Investors would like to see cooling inflation, a definitive end to the Fed’s tightening cycle, and who knows, maybe even some interest rate cuts later this year!

As always, don’t hesitate to contact us with any questions or if you would like to set up a meeting.

All the best – Southport Station Financial Management, LLC