Marketbites: Markets Stay Flat Ahead of Inflation Data
Portfolio Manager Commentary:
The S&P 500 was flat Tuesday as investors tried to shake off recession concerns ahead of the release of key inflation data later this week. Cyclical stocks outperformed, even as tech names lagged. Energy companies were among the top gainers in the S&P 500, with the sector up more than 1%. On the other hand, tech stocks lagged the broader index, with the information technology sector falling by more than 0.5%.
Meanwhile, CarMax shares jumped 10% after the used car retailer posted a stronger-than-expected quarterly profit. Moderna shares shed more than 2% after the biotech firm said it’s delaying its flu vaccine. Those moves come ahead of the March readings of the consumer price index, due later today, and the producer price index, out tomorrow. Both inflation metrics could give further clarity into how the Federal Reserve might proceed on its rate-hiking campaign.
Lastly, Wall Street is heading toward another season of earnings announcements, with several major U.S. banks scheduled to release their earnings reports for the first time since the series of bank crises in March. JPMorgan Chase, Wells Fargo, and Citigroup are set to report Friday. BlackRock and UnitedHealth Group are also scheduled to report.
Chart of the Day:
Profits for 2023 Q1 are projected to be down 6.8% from the same period last year. That would mark the steepest earnings decline since Q2 of 2020 when the pandemic resulted in a 32% profit contraction. Companies have been fighting a number of challenges including inflation, rising inflation rates, and recent concern about the health of the financial system following the two biggest bank failures since the 2008 financial crisis. Still, U.S. stocks have risen this year with the S&P 500 up 6.9%.
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