A Friday rebound, triggered by a big tech company’s earnings beat and a strong jobs report, shaved much of the week’s accumulated losses.
The Dow Jones Industrial Average fell 1.24%, while the Standard & Poor’s 500 lost 0.80%. The Nasdaq Composite Index was flat (+0.07%) for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slipped 0.62%.1,2,3
Renewed regional bank concerns weighed on investor sentiment last week, despite the rescue of a troubled bank before the start of the trading week.
But worries were not isolated to regional banks. Secretary of the Treasury Janet Yellen commented that the federal government may hit its debt ceiling earlier than expected, heightened investor jitters over a potential technical default. The stock market also slipped in the wake of the latest rate hike decision by the Federal Open Market Committee (FOMC).
Solid earnings from one mega-cap tech firm and a strong employment report steadied investors, resulting in a Friday bounce that ended a volatile week on a positive note.
Fed Hikes Rates
Amid concerns in the regional bank sector and tightening credit conditions, the Fed elected to increase interest rates by 0.25%, citing elevated inflation and robust job gains. Investors were more focused, however, on what the Fed signaled about its plans since the expected rate hike.
The Fed indicated it may pause further rate hikes, suggesting that future decisions will be based on economic data and prevailing financial conditions. Following the announcement, interest rate traders assigned an 89% probability that rates would remain unchanged following the next meeting of the FOMC in June.4, 5
This Week: Key Economic Data
Wednesday: Consumer Price Index (CPI).
Thursday: Producer Price Index (PPI). Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, May 5, 2023
This Week: Companies Reporting Earnings
Monday: PayPal Holdings, Inc. (PYPL), Skyworks Solutions, Inc. (SWKS), KKR & Co., Inc. (KKR)
Tuesday: Air Products and Chemicals, Inc. (APD)
Wednesday: Occidental Petroleum Corporation (OXY), The Walt Disney Company (DIS)
Source: Zacks, May 5, 2023
Need Last Year's Tax Returns?
Help is available for taxpayers who need tax information for prior years but who did not keep copies of their returns. There are ways to get the information you need.
Keep in mind the Internal Revenue Service (IRS) recommends that taxpayers keep copies of their returns and any documentation for at least three years after filing:
Tip adapted from IRS.gov6
I may be red, green, or yellow. Eat me, and you may stay a healthy fellow. My interior is white; I don't give off light. What am I?
Last week’s riddle: Two sailors stand on opposite sides of a boat. One looks west, and the other looks east – yet, they can both see each other clearly. How can this be? Answer: The sailors are looking inward (into the boat) while standing with their backs against the ship's sides.
Footnotes and Sources
2. The Wall Street Journal, May 5, 2023
3. The Wall Street Journal, May 5, 2023
4. The Wall Street Journal, May 3, 2023.
5. CMEGroup.com, May 3, 2023
6. IRS.gov, 2023
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Weekly Market Insights: Friday Rally Trims Losses; CPI Report Next Week
May 08, 2023