Last week was the best week for the S&P 500 since last November. This was thanks to a strong performance by the stock market Friday, primarily riding the wave of strong earnings releases Thursday after the market closed from Microsoft and Alphabet (Google). The NASDAQ also had its best week since last November. Value stocks, however, were able to retain their relative performance advantages over the last 1- and 3-months and for year-to-date performance. Another notable gainer last week was emerging markets, also up nearly 4%. Losing ground last week included the US dollar, commodities, and bonds. The overall bond market is now down by over 3% year-to-date and the only major asset class with a loss over the 12 months.
 
Regarding the economy, there was good and not-so-good news last week. As for the not-so-good, the leading reason for why interest rates keep going up is that inflation refuses to go down. Last week’s 1Q24 GDP report was notable. While the headline notes that real GDP came in below expectations (1.6% vs 2.5% expectation) and its slowest growth rate in almost two years, the key issue was that inflation remained a problem with GDP prices up at a 3.1% annual rate, personal consumption prices up at a 3.4% pace, and core consumption prices up at a 3.7% rate. Needless to say, these are not close to the Federal Reserve’s 2% target, and they are starting to move in the wrong direction. Nominal GDP — which is real GDP growth plus inflation — increased at a 4.8% rate in Q1. It is higher by 5.5% from a year ago. In short, this likely means short-term interest rates will stay higher for longer. This data also raises the question — originally raised by First Trust — if economic growth is partly if not primarily continuing because of AI and other innovations, why isn’t it pushing down inflation?
 
Okay, let us review some of the good news. First, it was indeed a good week for earnings. Last week alone, the projected year-over-year operating earnings per share growth for this quarter rose to 5.6%, compared to just 1.2% last week. That’s a nice jump in one week. Earnings growth is now expected to continue improving throughout 2024 and into 2025. Most recent analyst expectations are for 13% earnings growth for CY 2024. Also, thanks to a variety of stronger than expected economic growth readings of late, the GDPNow reading from the Atlanta Fed is projecting 2Q24 GDP at a healthy 3.9%.
 
As for this week, it is the first week of May, so we get a lot of employment data, including ADP employment, nonfarm payrolls, and the US unemployment rate. The FOMC Interest rate decision will also be announced on Wednesday, May 1. Consensus expectation is for another pause in rates. We also get a lot more earnings, including from Amazon, Apple, and Super Micro Computer. Something else to note is the continued volatility in tech. Over the last eight trading days, we have seen six 1% moves in the NASDAQ. Two days (the last two Fridays) were over 2% moves. Most of the large cap tech names have had single days of over 10% changes in price. In my experience, volatility like that often accompanies inflection points in the stock market. One more key market to watch: 10-year Treasury yields. They continue to trend back towards 5% yields. Could they threaten to hit new 20-year highs soon? Given recent trends, in both economic data and bond yields, it looks like a good bet.

Bottom line:

 

Stay invested. Stay diversified. Stay disciplined.

 

If you have any questions or comments, please let us know at strategists@brinkercapital.com or at rusty@orion.com. Thank you for your time and trust. See you next week!

 

 

 

Get Your Own Market Commentary

Client-Friendly Weekly Wire

Want a version of Weekly Wire you can send directly to your clients? Subscribe to our Weekly Wire newsletter and get a client-friendly version every Monday. Simply download, add your firm's logo, and use with your clients!

 

 

Key Data

Stocks, Bonds, Alternatives, & Real Assets as of April 26, 2024

Security Name

Risk Score

1 Wk

1 Mo

QTD

YTD

1 Yr

3 Yr Ann.

Global Equities (60% US, 40% Intl)

100

2.51%

-1.88%

-2.62%

5.12%

20.68%

4.45%

S&P 500 Total Return

102

2.68%

-1.91%

-2.87%

7.38%

27.71%

8.47%

Dow Jones Industrial Average

97

0.67%

-2.57%

-3.85%

2.05%

17.26%

6.15%

NASDAQ 100 Total Return

122

4.00%

-2.67%

-2.91%

5.56%

39.52%

8.99%

TV Benchmark

107

2.45%

-2.38%

-3.21%

5.00%

28.16%

7.87%

Morningstar US Large Cap

102

2.84%

-1.85%

-2.54%

8.26%

30.63%

8.66%

Morningstar US Mid Cap

113

2.26%

-2.43%

-4.13%

4.37%

20.91%

3.29%

Morningstar US Small Cap

125

2.47%

-3.03%

-5.27%

0.13%

19.23%

-0.78%

Morningstar US Value

98

0.92%

-1.50%

-3.58%

4.53%

18.00%

7.80%

Morningstar US Growth

126

3.51%

-3.92%

-4.69%

3.24%

28.40%

0.92%

MSCI ACWI Ex USA 

98

2.42%

-1.59%

-1.93%

2.79%

10.46%

0.44%

MSCI EAFE 

101

1.98%

-2.55%

-2.77%

3.00%

10.01%

2.86%

MSCI EM

98

3.77%

0.36%

0.01%

2.45%

10.98%

-5.75%

Bloomberg US Agg Bond Index

27

-0.08%

-2.18%

-2.43%

-3.19%

-1.25%

-3.55%

Bloomberg Commodity Index

70

-0.03%

4.77%

3.89%

6.17%

4.98%

7.94%

Wilshire Liquid Alternative Index

25

0.60%

-0.51%

-0.72%

2.42%

7.32%

1.20%

US Dollar

10

-0.52%

2.09%

1.01%

4.21%

3.67%

5.19%

Bloomberg US Treasury Bill 1-3mo

1

0.10%

0.48%

0.41%

1.73%

5.43%

2.79%

Source: Morningstar

The TV Benchmark represents an average of the S&P 500, Dow Jones IA, and NASDAQ 100 return indexes. The Orion Risk Score represents risk relative to the global equity market.

 

 

Interest Rates as of April 26, 2024

Rate

This Week

1 Wk Δ%

13-Wk Treasury Yield

5.24%

0.00%

10-Yr Treasury Yield

4.67%

0.05%

Bloomberg US Agg Yield

5.36%

0.03%

Avg Money Mkt Yield

5.12%

0.00%

Avg 30-Yr Mortgage Rate

7.23%

0.20%

Sources: Yahoo Finance, S&P Global, Crane Data, BankRate

 

 

Key Economic Data Last Week

Data Point

Expectation

Actual

Durable Goods Orders

2.6%

2.6%

Q1 GDP

2.2%

1.6%

Personal income

0.5%

0.5%

PCE YoY

2.6%

2.7%

Core PCE YoY

2.7%

2.8%

Sources: MarketWatch, First Trust

 

 

Key Economic Data This Week

Data Point

Expectation

Release Date

ADP Employment

0.3%

5/1/24

ISM Manufacturing

2.2%

5/1/24

FOMC Interest Rate Decision

0.5%

5/1/24

Nonfarm Payrolls

2.6%

5/3/24

US Unemployment Rate

2.7%

5/3/24/td>

Source: MarketWatch

 

 

More Just for You

Want More Resources?

Unlock a wealth of market commentary resources from Rusty Vanneman, Orion CIO – Wealth Management, and his team.

The views expressed herein are exclusively those of Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor, and are not meant as investment advice and are subject to change.
The CFA® is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.
The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.
Think2perform’s Behavioral Financial Advice program integrates traditional finance practices with psychology and neuroscience to improve emotional competency and decision-making behavior that increases effective usage of the financial plan with clients. To obtain the Behavioral Financial Advisor (BFA) designation, participants must complete a self-directed course, which takes 20-30 hours to complete, and includes a mix of interactive exercises, videos and case studies. To learn more about the BFA, visit https://www.think2perform.com.
Wealth Management services offered through Orion Portfolio Solutions, LLC d/b/a Brinker Capital Investments a registered investment advisor.

Compliance Code: 1 0 5 8, Brinker Capital Investments, April 29, 2024