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Better Than Feared
By Goldman Sachs, Asset Management
S&P 500 Index earnings printed better than feared in 1Q, with both sales and earnings exceeding consensus forecasts. The level of expected profit margins rose in 9 of the 11 sectors, reflecting the first sequential increase in margins in over a year, and is now back at pre-COVID levels. Slowing economic growth remains a downside risk to margins, though we believe resilient revenues and slowing input cost inflation will be supportive of earnings in coming quarters.
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Stocks rallied last week, propelled by growing optimism over reaching a deal on raising the debt ceiling and avoiding a technical debt default by the U.S.
The Dow Jones Industrial Average edged 0.38% higher, while the Standard & Poor’s 500 gained 1.65%. The Nasdaq Composite index advanced 3.04% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, lost 0.47%.1,2,3
Possible Debt Deal
After stumbling on weak April retail sales and a combination of disappointing earnings and weak guidance from a major retailer, stocks moved higher mid-week as the news on the debt negotiations turned more positive.
The prospect of an agreement helped to lift a cloud of uncertainty that had weighed on markets in recent weeks and sparked sufficient optimism to shake off comments by the Dallas Fed President, who indicated that economic data may not support a pause in rate hikes yet. Aiding the market’s upbeat mood was a positive update on deposit growth at a troubled regional bank.
Stocks surrendered some of the week’s gains on Friday following reports of an impasse on debt talks and comments by Fed Chair Powell.
Recent updates have suggested that the housing market may be staging a turnaround after a long period of contraction. Last week’s data contained some fresh evidence of revival and caution that any potential recovery may remain further out.
The first positive sign was an increase in home builder sentiment that put the National Association of Home Builders Housing Market Index’s confidence level at the midpoint for the first time since July 2022. An unexpected 2.2% rise in housing starts in April followed. These encouraging reports, however, were followed by a disappointing 3.4% decline in April existing home sales.4, 5, 6
This Week: Key Economic Data
Tuesday: Purchasing Managers’ Index (PMI) Composite. New Home Sales.
Wednesday: FOMC Minutes.
Thursday: Gross Domestic Product (GDP). Jobless Claims.
Friday: Consumer Sentiment. Personal Income and Outlays. Durable Goods Orders.
Source: Econoday, May 19, 2023
This Week: Companies Reporting Earnings
Monday: Zoom Video Communications, Inc. (ZM)
Tuesday: Lowe’s Companies, Inc. (LOW), Palo Alto Networks, Inc. (PANW), AutoZone, Inc. (AZO), Intuit, Inc. (INTU)
Wednesday: Nvidia Corporation (NVDA), Analog Devices, Inc. (ADI), Snowflake, Inc. (SNOW)
Thursday: Costco Corporation (COST), Marvell Technology, Inc. (MRVL), Workday, Inc. (WDAY)
Source: Zacks, May 19, 2023
"Ideas are like rabbits. You get a couple and learn how to handle them, and pretty soon you have a dozen."
– John Steinbeck
Taking A Side Gig? Here’s How It May Affect Your Taxes
Taxpayers who work in the gig economy may benefit from having a better understanding of how their work affects their taxes.
People involved in the gig economy earn income as freelancers, independent workers, or employees. They use technology to provide goods or services, including renting out a home or spare bedroom and providing car rides.
Here are some things taxpayers should know about the gig economy and taxes:
Show Your Heart Some Love
Heart disease is the number one killer of men and women in the U.S. While age, genetics, and family history are risk factors related to heart disease, some lifestyle factors are associated with better heart health. But first, discuss any medical concerns with your healthcare provider before beginning any diet or fitness regimen. The following information is not a substitute for medical advice:
I nearly always lie on a surface and come in different shapes and sizes, often with curves. You can put me anywhere you like, yet there is only one proper place for me. What am I?
Last week’s riddle: Note this alphabetic progression: B, C, D, E, G. What letter should then follow as the sixth letter in this successive series? Answer: P, the next rhyming letter in the sequence.
S. American Saguaros, Purmamarca, Jujuy, Argentina.
Footnotes and Sources
2. The Wall Street Journal, May 19, 2023
3. The Wall Street Journal, May 19, 2023
4. National Association of Home Builders, May 16, 2023.
5. Fox Business, May 17, 2023
6. The Wall Street Journal, May 18, 2023
7. IRS.gov, April 4, 2023
8. MedlinePlus.gov, 2023
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The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
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Weekly Market Insights: Despite Stall, Debt Deal Optimism Cheers Markets
May 24, 2023