Voting is open for the Volunteer Center of the Lehigh Valley Volunteer Challenge. #TeamVNFA partnered with Pleasure of Your Company Therapy Dogs (POYC) for the 2024 Volunteer Challenge! Pleasure of Your Company (POYC) Therapy Dogs is a nonprofit organization dedicated to sharing the benefits of pet therapy by visiting community members who are unable to own dogs themselves. Their certified therapy dog teams regularly visit senior living communities, nursing homes, hospice facilities, schools, universities, hospitals, and beyond.
For the week, the Dow Jones Industrial Average rose 1.1%, the S&P 500 Index rose 0.6%, and the NASDAQ rose 1.4%. Utilities were the best-performing sector for the week (+3.4%), while energy was the worst-performing sector (-3.3%). Following Wednesday’s FOMC decision to leave rates unchanged, markets felt relieved that the Fed indicated it is not currently considering raising rates. Chair Powell described the current monetary policy as appropriate for handling appropriate scenarios. Overall, it is reassuring to see companies delivering robust earnings, with an impressive 79% surpassing analysts’ projections, resulting in an average upside surprise of almost 9%. The 10-year U.S. Treasury closed the week at 4.50%, a stunning 17 basis points lower than the previous week, showing that traders are finally accepting the next move the Fed will be to lower rates.
U.S. & Global Economy
Certainly, all investors know we have a U.S. presidential election in November of this year. It is normal to have investor anxiety around events like this. Still, the markets are more efficient than investors, and the markets seem to understand that either outcome in November is a known commodity one way or another. Major elections and changes to interest rates can be two of the most unsettling things investors face. However, through presidents from both parties and countless interest-rate changes, the stock market has been resilient and has taken these changes in stride. See Chart 1 from Hartford, Morningstar, and the Federal Reserve Bank, which shows the growth in the S&P 500 and the Fed Funds Rate over the past 60+ years and multiple changes in administration showing the growth in the S&P 500 and the Fed Funds Rate over the past 60+ years and multiple changes in administrations.
Policy and Politics
Last week, Israel stated their refusal to agree to Hamas’ demands for ending the conflict in Gaza, as both sides continue to exchange accusations amidst ongoing ceasefire negotiations, which have yet to show considerable progress. On Friday, the Russia-Ukraine conflict entered its 800th day, marking another significant milestone in the prolonged battle, which shows no immediate signs of ending.
Economic Numbers to Watch This Week
U.S. Consumer Credit for March 2024 prior $14.1 billion
U.S. Wholesale inventories for March 2024 prior 0.5%
U.S. Initial Claims for Unemployment Insurance for the Week of May 4th, 2024, prior 208,000
U.S. Consumer sentiment (prelim) for May 2024, prior 77.2
U.S. Monthly U.S. federal budget, April 2024 -$236 billion
Markets do not move in a straight line. After five consecutive monthly gains, markets moved lower in April, with the S&P 500 down by 4.2%. Despite moderation in the first quarter of GDP (Gross Domestic Product) and a slight cooling in job growth for the month of April, we continue to see the U.S. economy on solid footing. It is promising to see earnings growth and performance leadership broadening beyond the popular mega-cap tech stocks. This builds a sturdy base for the market to continue to move higher. Please contact your advisor at Valley National Financial Advisors with any questions.
Questions can be submitted to yourfinancialchoices.com before the live show. Recordings of past shows are available to listen to or download at yourfinancialchoices.com and wdiy.org.
Did you miss the last show, Navigating Transitions – Marriage, Divorce, Retirement, Death of a loved one? Listen Here
The health of the U.S. economy is a key driver of long-term returns in the stock market. Below, we grade key economic conditions that we believe are of particular importance to investors.
The “Heat Map” is a subjective analysis based upon metrics that VNFA’s investment committee believes are important to financial markets and the economy. The “Heat Map” is designed for informational purposes only and is not intended for use as a basis for investment decisions.
Cinco de Mayo isn’t Mexico’s Independence Day; rather, it honors the Battle of Puebla on May 5, 1862.
Cinco de Mayo is known to symbolize resilience because the Mexican army won over the French at Puebla despite being outnumbered.
Celebrated globally, Cinco de Mayo is a significant event in Mexico and the U.S. Cinco de Mayo is also celebrated globally, from Canada to Australia and even Japan!
Margaritas, mariachis, tacos, and salsa are indispensable elements for a Cinco de Mayo celebration.
Philadelphia holds the record for the largest piñata, measuring an impressive 61 feet in length.
So, whether you’re enjoying tacos with friends or celebrating at home, let’s celebrate the lively essence of Cinco de Mayo with a toast!
Amidst a flurry of earnings reports, the release of the first-quarter GDP, and updates on inflation, investors endured a week of volatility. Despite this, stocks rebounded with tech sector strength, buoyed by robust corporate profits and steady economic growth, albeit at a slower pace. For the week, the Dow Jones Industrial Average rose 0.7%, the S&P 500 Index rose 2.7%, and the NASDAQ rose 4.2%. Information technology was the best-performing sector for the week (+5.1%), while energy was the worst-performing sector (+0.7%). This week, 37% of S&P 500 companies reported quarterly earnings, including Magnificent Seven tech stocks, including Google, Meta (Facebook), Microsoft, and Tesla. About one-third of the 229 companies reported exceeded sales expectations, while two-thirds beat earnings per share (EPS) estimates, with an average surprise of 9%. GDP growth slowdown tempered by resilient domestic demand and stagnant inflation are likely influencing the Fed’s cautious stance. Yields of U.S. government bonds rose for the fourth week in a row. The 10-year U.S. Treasury closed the week at 4.67%, five basis points higher than the previous week.
U.S. & Global Economy
The resilience of the U.S. economy in the face of much higher interest rates has been one of the biggest surprises of the past two years. As recently as last year, most economists were expecting a recession, and we have seen anything but. See Chart 1 below from Valley National Financial Advisors and YCharts, which shows three common recession indicators: The Sahm Rule, The Misery Index, and the Probability of a U.S. Recession. While we understand it is a busy chart, the message is simple: the data is not telling us we are nearing a recession. The data is screaming growth ahead.
The U.S. economy continues to grow healthy despite a dramatic rise in the Fed Funds Rate to its current range of 5.25% to 5.50%, a 23-year high. We understand the reasons for the recent interest rate hikes; inflation was over 9%, but it has fallen to just over 3%. The last move towards the Fed’s target of 2% is taking a bit longer than some expected. Still, the markets thus far have been correct in seeing the real message: growth is continuing, inflation is coming down, and corporate earnings have been steady.
While the U.S. is clearly growing at a respectable clip, global growth is continuing elsewhere as well. According to the A.P. News, the International Monetary Fund (IMF) upgraded 2024’s global outlook, saying the world is headed toward the elusive “soft landing.” The IMF predicts a 3.2% global expansion this year and sees global inflation falling to 5.9% in 2024, down from 6.8% in 2023. We expect growth to continue at a measured pace and inflation to continue to fall at the same measured pace.
Policy and Politics
Local, national, and global unrest around wars and politics is stoking fear and uncertainty, which can permeate the markets. But the data – earnings, employment, housing – tells another story –expansion and growth. College campus unrest also continues throughout the U.S., but we have seen this story before, and with the school year coming to an end soon and students leaving campus, it is likely that these protests will dwindle down as well. However, the wars and unrest around the world will continue throughout the summer, and with the presidential election this fall, that will be anything but easy on the U.S.
Economic Numbers to Watch This Week
Target Fed Funds Rate announced, current 5.50%
U.S. Job Openings Non-farm for March ‘24, prior 8.756M
U.S. Initial Claims for Unemployment Insurance for the Week of April 27, 2024, prior 207,000.
U.S. Labor Force Participation Rate for April 2024, prior to 62.7%
U.S. Unemployment Rate for April 2024, prior to 3.8%
As markets gear up for another wave of quarterly earnings releases, the week ahead holds some key events, including a U.S. Federal Reserve policy meeting and the eagerly awaited April jobs report. Investors are curious to see if April’s job growth matches March’s surprisingly strong increase. Against the backdrop of ongoing market ups and downs driven by inflation fears and economic data swings, tech stocks are lending some strength to the market, even as the broader economy shows signs of cooling off. All eyes will be on Apple and Amazon when they report their quarterly earnings this week. Please reach out to your advisor at Valley National Financial Advisors with any questions.
Questions can be submitted to yourfinancialchoices.com before the live show. Recordings of past shows are available to listen to or download at yourfinancialchoices.com and wdiy.org.
Did you miss the last show, Financial Education Resources? Listen Here
The health of the U.S. economy is a key driver of long-term returns in the stock market. Below, we grade key economic conditions that we believe are of particular importance to investors.
The “Heat Map” is a subjective analysis based upon metrics that VNFA’s investment committee believes are important to financial markets and the economy. The “Heat Map” is designed for informational purposes only and is not intended for use as a basis for investment decisions.
