Market Data as of Week Ending: 4/28/2023 unless noted otherwise
U.S. stock prices were mixed as investors grapple with uncertainty around the economic outlook, the U.S. debt ceiling, and the Fed’s policy meeting. In the last week of April, 35% of S&P 500 companies reported quarterly results that represented nearly 44% of the index by market capitalization. Earnings have been better than expected as 79% of companies have reported a positive earnings surprise, according to FactSet. Growth stocks rotated back into favor and outperformed their value counterparts, while small and mid-sized companies lagged their large cap peers. Several mega cap stocks such as Alphabet, Microsoft, Apple, and Meta reported and contributed to outperformance in the communication services and information technology sectors. Five sectors finished with modest declines for the week, with the most notable declines in the utilities and industrials sectors. Developed foreign and emerging markets stocks were mixed for the week and developed markets lagged domestic equities.
U.S. Treasury yields ended the week lower as investors weigh a widely expected 0.25% increase to the Fed’s policy rate with concerns about the approaching debt ceiling. The 10-year and 2-year U.S. Treasury yields ended the week lower at 3.44% and 4.04%, respectively. Returns were mostly positive across the fixed income spectrum as government bonds outperformed across the curve. Yields for investment grade corporate bonds and high yield bonds ended the week at 5.1% and 8.6%, respectively.
Economic data for the week was mixed as first quarter GDP came in much lower than expected at 1.1%. Consensus expectations were nearly 2% for the first release of quarterly GDP which came in lower due to slower business spending, such as scaling back on equipment purchases and drawing down inventories. Inflation figures were lower than expected, up 0.3% for the month of March according to the Fed’s preferred measure, Core PCE, which excludes food and energy prices. Headline inflation was also lower than expected at +0.1% in March and +4.2% compared to the same period one year ago. In other economic data, consumer confidence declined, durable goods were better than expected, and wage growth remains elevated according to the employment cost index. In Europe, economic growth came in lower than expected, up only 0.1%, as inflation in the UK, Germany, and France remains elevated, and higher prices are reducing demand.