Hawkish Fed Speak Causes Equities To Pause
Markets were slightly lower after a week of hawkish comments by multiple Fed speakers.
So far, 18% of S&P 500 companies have reported 1st quarter earnings and the season is off to a better start than the previous two quarters. Of these companies, 76% have reported earnings above estimates and 63% have reported revenues above estimates. It was a mixed week for economic data, but Fed speakers soured the market rally of the last few weeks. Nearly all speakers took a hawkish tone and sounded even nonsensical at times by stating that inflation has “moderated” and needs to show further “sustained” improvement, despite 9 consecutive months of declines.
Housing data was mixed as was manufacturing data.
A surprise at the end of the week were the PMI numbers which showed a value over 50, signaling economic expansion. Money Market flows were negative for the first time since the start of the banking crisis, but usage of the Fed’s Discount Window increased for the 1st time since the crisis started. The Fed's National Financial Conditions Index continues to remain in negative territory, meaning financial conditions are "loose" and on solid footing for the time being. The Fed goes into a blackout period before the FOMC meeting next week, so no Fed speakers this week might calm markets.
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