Weekly Market Update

April was a challenging month for investors as the historic velocity and magnitude in the recent rise in interest rates continued to weigh on markets and buyers seemed to go on strike as investors nervously anticipate next week’s Federal Reserve meeting announcements on May 4th. Despite some notable earnings misses (i.e., Netflix, Amazon, etc.), first quarter (Q1) results have generally been upbeat, and stocks attempted to rally, finishing positive three days this week. Markets also rallied on Thursday’s Q1 US GDP report that showed the economy unexpectedly contracted -1.4% (versus +1% expectations) as investors considered that perhaps weak economic data might compel the Fed to slow its intended pace of rate hikes out of fears of throwing us into recession. However, Thursday’s 2.5% rally for the S&P 500, the second-best market session so far in 2022, unraveled on Friday as disappointing earnings forecasts from Amazon and Apple combined with expectations of the Fed hiking interest rates by 50-basis point (0.5%) next Wednesday and traders opted to sell the prior day’s strength. Obviously, next week’s Fed meeting is the preeminent market event, but Friday’s jobs report for April will also be very important as after Thursday’s positive market response to the weak GDP number, we wonder if perhaps a bad jobs figure might perversely be cheered by investors.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder