Weekly Market Commentary
Earnings season begins this week
Posted on April 25, 2023
Market Commentary by Larson COO Mitchell Wood
|The Major Markets closed lower, but minimally so last week, with the exception of the MSCI Emerging Markets Index. For much of the developed markets, market analysts appeared to be waiting in anticipation of the quarterly earnings releases over the next few weeks.
Earnings season begins in earnest this week with over a thousand companies reporting. The number increases the next two weeks with 1,743 companies publishing results the week of May 8th.
But last week, the S&P 500 traded in a fairly narrow range with the index only slightly exceeding a half-percentage point at the close on Thursday.
|In fact, last week was one of the quietest weeks for volatility in the last 90 days.
|The calm in the markets was most visible in the CBOE’s VIX Index, which traded to the lowest level in over a year.
What has begun to see some excitement of late is the topic of the debt ceiling. Since Janet Yellen wrote to Congress in January of this year, the political fight over the debt ceiling has been looming in the background. In January, Yellen stated that her “extraordinary measures” should last ‘til early June.
However, some analysts have pointed out the last week’s US Treasury General Balance showed an unusually low-level despite being the week of when tax returns and consequently income tax payments are due. Traditionally, the value of the US Treasury’s General Account Balance reaches an annual peak shortly after the April tax filing deadline. However, Wednesday’s reading of $265 Billion stands at the lowest Tax Week level since 2017, despite government spending having significantly increased in that period of time.
This could tighten the window of time that Washington has to negotiate the debt ceiling before the next government shutdown.
Nevertheless, treasuries likewise remained unphased with the overall yield curve staying effectively unchanged week over week.
The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries. https://us.spindices.com/indices/equity/sp-500
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. https://us.spindices.com/indices/equity/dow-jones-industrial-average
The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes. https://indexes.nasdaqomx.com/Index/Overview/COMP
The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.
The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017, it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country. https://www.msci.com/
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market. https://us.spindices.com/indices
Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®). https://us.spindices.com/indices