Equities were lower for the week despite the Fed hinting at a pause in future rate hikes.
First quarter corporate earnings are having their best performance, relative to analysts’ expectations, since the first quarter of 2021. So far, 79% of S&P 500 companies have out-paced earnings estimates and 75% have beat on revenue estimates. Last week, the market was focused on the FOMC meeting. As was largely expected, the Fed raised rates 25 basis points and hinted at a rate hike pause moving forward. While economists had expected the market to respond positively to the announcement, equities headed lower on Wednesday and Thursday following the announcement. Friday saw a nice rebound, but it was too late to help equities turn positive by week-end.
More drama around regional banks kept markets skittish, although positive news on Friday revealed a much lower usage by banks of the Fed’s Discount Window and Money Market Flows resumed its downward trend.
Last week’s Labor Report showed another surge in jobs of +253,000. The Unemployment Rate declined, indicating an economy still on solid footing as the last rate hike is now in the books. Investors will be watching the inflation numbers this week as “sticky inflation” has become the new buzz word. If inflation declines for April, it would mark the 10th consecutive decline, year-over-year. Expect more choppy trading this week as markets continue to digest the meaning of a "hawkish pause."
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