Rising fears of recession did little to alter the trajectory of the S&P 500 (Index: SPX) during the third week of April 2023. The index ended the week at 4133.52, down just 0.1% from where it closed the previous week.
It didn't start off that way. Earlier in the week, signs that China's efforts to stimulate its economy were finally gaining traction buoyed the U.S. stock market. But by week's end, investors returned their focus to the domestic situation in the U.S. economy, with the net effect of leaving the S&P 500 index just slightly lower.
That action, or lack thereof, can be seen in the latest update to the alternative futures chart. We find the level of the S&P 500 is just a bit below the midpoint of the redzone forecast range we added for last week's update.
Our reading of why stock prices behaved as they did in the week that was is drawn directly from the week's market-moving headlines. Here's our summary of the new information investors had to absorb during the past week:
- Monday, 17 April 2023
-
- Signs and portents for the U.S. economy:
- Oil drops 2% on higher dollar, interest rate concerns
- Tighter lending seen bringing mild recession later this year-Vanguard
- Bigger stimulus still developing in China:
- Eurozone government minions, ECB minions claim they're worried about inflation:
- Inflation is a tough beast says German finance minister
- ECB can review inflation goal once it's achieved, Lagarde says
- Wall St ends higher; investors await earnings, Fed cues
- Tuesday, 18 April 2023
-
- Signs and portents for the U.S. economy:
- Some Fed minions looking for bigger rate hikes:
- More signs of economic recovery developing in China:
- BOJ minions pledge they'll keep never-ending stimulus alive:
- ECB minions willing to leave size of rate hike to chance:
- S&P 500 ekes out gain as tech supports, J&J, Goldman disappoint
- Wednesday, 19 April 2023
-
- Signs and portents for the U.S. economy:
- More US consumers are falling behind on payments
- Oil falls 2% as dollar gains on potential Fed rate hike
- Fed minions see economy plodding along:
- Bigger trouble developing in Japan:
- Bigger stimulus developing in China:
- China says drafting plans to boost recovery, expansion of consumption
- China may hold lending benchmarks steady as recovery remains on track -analysts
- Analysis: China's 'atypical' deflation cycle gives central bank a headache
- ECB minions worried about inflation have more inflation, credit squeeze to deal with:
- Core euro zone inflation edges up in March, keeping ECB on alert
- Euro zone services booming but sentiment recovery may have stalled -ECB's Lane
- Credit squeeze 'biggest threat' to economic outlook, Fidelity says
- Dow dips, S&P 500 stable after medtech gains, Netflix drag
- Thursday, 20 April 2023
-
- Signs and portents for the U.S. economy:
- US existing home sales resume downward trend in March
- US labor market cooling; leading indicator flashes recession
- Oil falls 2% on recession fears, swelling US fuel stocks
- Fed minions looking for one more rate hike:
- China central bank minions claim they're not worried about deflation:
- BOJ minions think all is economically well in 7 of 9 regions of Japan, thinking about changing up never-ending stimulus sometime later:
- BOJ keeps upbeat economic view on seven of Japan's nine regions
- https://www.reuters.com/article/japan-economy-boj-ycc/boj-open-to-tweaking-ycc-this-year-if-wage-momentum-holds-sources-idUSKBN2WH0AR
- ECB minions want more rate hikes before stopping, don't trust inflation is over in Eurozone:
- ECB's Lagarde: "still a bit of a way to go" on monetary policy
- Some ECB governors doubted 'immaculate disinflation' in March
- Wall St slides after gloomy earnings led by Tesla
- Friday, 21 April 2023
-
- Signs and portents for the U.S. economy:
- U.S., Euro zone business activity accelerates to 11-month highs in April
- US bank deposits, loans ticked down in latest week -Fed data
- Fed minions looking forward to one more rate hike, blame loophole for their missing signs of Silicon Valley Bank failure, not so sure of their next steps:
- Fed tilts toward rate hike, with a possible pause in view as lending slows
- U.S. Fed works on loophole that masked losses on SVB's securities -WSJ
- Fed's Cook sees a less certain outlook for future of monetary policy
- Bigger stimulus developing in China:
- BOJ minions see less economic shrinkage, broadening inflation, not going to change never-ending stimulus, say all's good with financial system:
- Japan's factory activity shrinks at slowest pace in six months - PMI
- Japan's broadening inflationary pressures test BOJ's dovish stance
- BOJ likely to maintain ultra-low rates, dovish guidance next week -sources
- BOJ sees 'sound and resilient' financial system despite some jitters
- ECB minions thinking about keeping rate hikes going:
- Wall St posts slim gain ahead of big earnings week
- Monday, 24 April 2023
-
- Late breaking bonus headline!
- Analysis-China rebound buoys hopes for stronger-than-expected US, Europe earnings
- This analysis follows up the factors we observed boosting U.S. stock prices in the earlier part of the preceding week. Given its focus, we thought it made sense to add it to this week's roundup of market-moving headlines as a late breaking bonus headline.
The CME Group's FedWatch Tool anticipates the Fed will hike the Federal Funds Rate by a quarter point to a target range of 5.00-5.25% at its upcoming meeting on 3 May (2023-Q2). After that, the FedWatch tool anticipates a series of quarter point rate cuts starting from 1 November (2023-Q4) and continuing at six-to-twelve-week intervals through the CME FedWatch tool's available forecast period, which extends through 25 September 2024 (2024-Q3).
The Atlanta Fed's GDPNow tool's projection for real GDP growth in the first quarter of 2023 held steady at +2.5% over the past week. The so-called Blue-Chip consensus predicts it will be +1.5% (or rather, that's the average of 10 forecasts that anticipate real growth anywhere from +0.3% to +2.5% for 2023-Q1). The GDPNow tool is now fully looking backward instead of forward and will continue to do so until the U.S. Bureau of Economic Analysis releases its advance estimate of real GDP on 27 April 2023.
Image credit: Photo by Aditya Vyas on Unsplash.