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Gradient Investments Weekly Talking Points 04/29/2022
|All data is for the week ended April 29, 2022|
Stocks US equities were down sharply last week, with the benchmark S&P 500 dropping 3.26%, the Russell 2000 declining 3.94% and the NASDAQ falling 3.92%. Overseas, the developed markets (MSCI EAFE) also declined, by 2.17%, while the emerging markets (MSCI EM) managed a 0.09% increase. Each of the 11 sectors in the S&P declined, led by consumer discretionary and real estate.1
Fixed IncomeThe Federal Reserve will meet this week and most investors are anticipating a 50 basis point (or 0.50%) increase to the Federal Funds rate as the outcome. The decision to raise rates is part of a well-telegraphed plan by the Fed to slow inflation in a period of good employment and ongoing supply shortages. The 10-year treasury benchmark ended the week with a 2.89% yield, down 1 basis point from the prior week.2
CommoditiesWhile weekly US oil production is gradually rising, demand from the European Union appears to be rising faster as a result of the Russian invasion of Ukraine. Last week Germany and then the European Union indicated they want to phase out imports of oil from Russia completely over the next few months after initially indicating that energy would not be a part of their sanctions. West Texas crude oil closed at $104.69 per barrel, up 2.6% for the week.3
Economic DataGross domestic product (GDP) fell at a 1.4% annualized rate last quarter versus consensus expectations for a 1% gain. That was the first quarter-over-quarter decline since the pandemic recession nearly two years ago and followed a 6.9% advance in the prior quarter. Growth in consumer spending and business fixed investment was overwhelmed by the trade deficit, particularly from increased imports by businesses worried about supply shortages.4Orders for U.S durable goods — products meant to last at least three years — advanced 0.8%, rising for the fifth time in the past six months. On a year over year basis, total new orders rose 12.6%. The increase in core orders, a measure of business investment, was the most positive sign.5New home sales accelerated their decline in March to -8.6% while the median sales price climbed to a record peak of $436,700. On a year over year basis, new home sales were down 12.6%.6Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 180,000 for the week ended April 23, suggesting that the U.S. economy is putting the Omicron wave of the coronavirus behind it.7
Company News8Apple Inc, (AAPL), a G33 and Core Select holding, reported revenue and earnings that exceeded expectation led by gains in its services business (now 20% of total revenues). The board raised its dividend by 5% and increased its share buyback program by a hefty $90 billion.9 Shares were down 2.6% for the week.
Lennox International Inc. (LII), a G50 holding, declined 13.6% after reporting revenue and earnings that beat expectations. Investors drove the share price down over concerns about the housing market for this maker of heating and cooling systems for residential and commercial buildings. 10
Meta Platforms Inc. (FB), a G33, Contrarian Choice and Core Select holding, reported profits that exceeded expectations. Also, the gauge of daily average users returned to gains and beat expectations after a rare decline in the prior quarter. Shares rose 8.9% for the week.11
Did you know… Cinco de Mayo (also known as Gradient Investments president Mike Binger’s birthday) is the widely celebrated anniversary of the Mexican victory over French forces at the Battle of Puebla on May 5, 1862. This victory was achieved despite the fact that the Mexicans were far outnumbered by the French.
Mariann Montagne, CFAPortfolio Manager
Sources:1 JP Morgan Weekly Market Recap 5-2-222 US Treasury3 Oilprice.com4 Bureau of Economic Analysis 4-28-225 US Census Bureau 4-26-22 and table 16 US Census Bureau 4-26-227 Department of Labor 4-28-228 All weekly changes in company stock prices: Yahoo Finance9 Apple Inc. press release 4-28-2210 Lennox International press release 4-25-2211 Meta Platforms press release 4-27-22Advisory services are offered through American Retirement Advisors, Inc., a Registered Investment Advisor in the State of Michigan. Insurance products and services are offered through American Retirement Solutions, an affiliated company. American Retirement Advisors, Inc. and American Retirement Solutions are not affiliated with or endorsed by the Social Security Administration or any government agency. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Moreover, this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.For the latest industry updates, follow us!