The three major stock market averages all ended with gains last week. The Dow Jones Industrial Average and the Standard & Poor’s 500 Index both broke two-week losing streaks, rising .4% to 33,427 and 1.7% to 4,192, respectively. The NASDAQ Composite led the averages with a 3% jump, finishing the week at 12,658 and registering its fourth straight week of gains.
Market gains came despite worries over the debt-ceiling, along with renewed concerns around the health of the banking sector, after Treasury Secretary Yellen reportedly stated more bank mergers may be necessary. Equities have also been holding up well in general, considering the Federal Reserve has been aggressively raising interest rates over the past year.
Even though the Fed has raised rates 10 consecutive times since beginning its tightening cycle to fight inflation, the Standard & Poor’s 500 Index is up approximately 9% so far this year. Noteworthy, the market gains have been concentrated in some of the biggest technology stocks, such at Apple, Microsoft, and Meta Platforms. Technology stocks have benefitted from investor enthusiasm over Artificial Intelligence, and they have led the market higher.
Looking to the week in front of us, we’ll get a fresh handful of earnings reports and some economic data. Even though first quarter earnings season is basically wrapped up, reports from Lowe’s, NVIDIA, AutoZone, Best Buy, Costco Wholesale, Medtronic and Ulta Beauty will all be worth watching. The Bureau of Economic Analysis will also be releasing data on personal income and personal consumption expenditures for last month. Expectations are that both will increase by .4% month over month.
Mostly this week, investors will be closely monitoring the debt-ceiling negotiations. Treasury Secretary Yellen has warned the U.S. may run out of money and be unable to pay all its bills, as early as June 1st. President Biden and House Speaker McCarthy are scheduled to meet today. This situation has drawn a great deal of media attention, and we have received many questions regarding the debt-ceiling, so we would like to address the issue here as well. For starters, we think it is an extremely low probability the U.S. would default on its debt. Further, we do not believe in short term trading, or trying to time if, when, and what kind of announcement may come out of Washington.
As always, please contact us with any questions, or if you would like to schedule a meeting.