Last week was another fascinating week in the markets. It also ended a difficult month, but will the April showers bring May flowers? Depending on the economic data du jour, it seemed like most days last week (and recent weeks for that matter) investor sentiment zig and zagged regarding whether to be risk-on or risk-off, whether the economy was growing or slowing, if inflation was falling or rising or whether the Fed would cut or raise short-term interest rates next. Last week was the end of a tough month. Notably, while the stock market is still holding onto gains for the year, the bond market, at least looking at the Aggregate Index, is down on the year. The overall bond market is also sporting a loss over the last year, 3-years and 5-years. And this is even before inflation factors into the real returns. It has been quite the bear market for bonds.

In the end though, again it was a good week for the stock and bond markets. Stocks rose about 1% and 10-year Treasury yields dropped from 4.6% to 4.5%. The latter was important, as the march to 5%+ yields has at least been temporarily halted. The key data last week was Friday’s employment data. While it still showed modest growth and another unemployment rate below 4% (the longest stretch of such readings in decades), it was below expectations, as was wage growth. Most economic growth data had been surprising to the upside not the downside in recent months, but last week was an exception. This, along with oil prices dropping yet again last week, seems to take away a few of the short-term pressure points for the stock and bond markets. Economic growth expectations also dropped last week for 2Q24 GDP to 3.3% (from 3.9%) according to GDPNow.

As for this coming week, it is a quiet week for economic data. We will get more corporate earnings data though. It has been a good earnings season so far. With 80% of the companies having now reported, the year-over-year earnings growth is projected to be 5%. If that holds, which it likely given that over 75% of companies have beat earnings expectations so far this earnings season, it will be the best quarter for earnings growth in nearly two years.

While some of the short-term storm clouds have dissipated of late, there are some interesting markets making some notable moves. We have recently written about commodity prices such as copper and what that might be signaling regarding higher-than-expected growth for the global economy. It is also notable that China and the emerging markets in general have been on a tear of late too. Are those sharp rallies just a dead cat bounce (i.e, just. short-term bounce in price before faltering again), or the beginning of something more substantial?

Either way:

 

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!

 

 

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Key Data

Stocks, Bonds, Alternatives, & Real Assets as of May 3, 2024

Security Name Risk Score 1 Wk 1 Mo QTD YTD 1 Yr 3 Yr Ann.
Global Equities (60% US, 40% Intl) 100 1.03% -0.88% -1.62% 6.20% 21.16% 4.96%
S&P 500 Total Return 102 0.56% -1.53% -2.32% 7.99% 27.32% 8.62%
Dow Jones Industrial Average 97 1.14% -1.07% -2.76% 3.21% 18.20% 6.42%
NASDAQ 100 Total Return 122 0.98% -1.47% -1.96% 6.59% 38.46% 9.93%
TV Benchmark 107 0.89% -1.36% -2.35% 5.93% 27.99% 8.32%
Morningstar US Large Cap 102 0.65% -1.28% -1.90% 8.96% 30.22% 8.92%
Morningstar US Mid Cap 113 0.24% -2.58% -3.90% 4.62% 20.75% 3.59%
Morningstar US Small Cap 125 1.13% -2.02% -4.20% 1.25% 19.89% -0.21%
Morningstar US Value 98 0.19% -2.41% -3.40% 4.73% 18.00% 7.33%
Morningstar US Growth 126 1.22% -1.92% -3.53% 4.50% 28.36% 2.05%
MSCI ACWI Ex USA  98 1.63% 0.23% -0.33% 4.47% 11.94% 1.24%
MSCI EAFE  101 1.66% -0.30% -1.15% 4.70% 11.47% 3.62%
MSCI EM 98 2.03% 2.00% 2.04% 4.53% 12.89% -4.62%
Bloomberg US Agg Bond Index 27 1.17% -0.51% -1.29% -2.06% -0.66% -3.15%
Bloomberg Commodity Index 70 -1.43% -0.12% 2.40% 4.64% 5.32% 6.85%
Wilshire Liquid Alternative Index 25 0.08% -0.53% -0.64% 2.50% 7.19% 1.16%
US Dollar 10 -0.28% 0.46% 0.72% 3.91% 3.28% 4.87%
Bloomberg US Treasury Bill 1-3mo 1 0.10% 0.47% 0.51% 1.84% 5.50% 2.83%
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 May 3, 2024

Rate This Week 1 Wk Δ%
13-Wk Treasury Yield 5.23% -0.01%
10-Yr Treasury Yield 4.50% -0.12%
Bloomberg US Agg Yield 5.18% -0.15%
Avg Money Mkt Yield 5.13% 0.01%
Avg 30-Yr Mortgage Rate 7.31% 0.28%
Sources: Yahoo Finance, S&P Global, Crane Data, BankRate

 

 

Key Economic Data Last Week

Data Point Expectation Actual
ADP Employment 183,000 192,000
ISM Manufacturing 49.9% 49.2%
FOMC Interest Rate Decision Pause Pause
Nonfarm Payrolls 240,000 175,000
US Unemployment Rate 3.8% 3.9%
Sources: MarketWatch, First Trust

 

 

Key Economic Data This Week

Data Point Expectation Release Date
Consumer Credit $15.0B 5/7/24
Wholesale Inventories -0.4% 5/8/24
Consumer Sentiment 76.0 5/10/24/td>
Source: MarketWatch

 

 

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