Market Commentaries

  • Last Week’s Markets in Review: Strong Earnings vs. Declining Consumer Sentiment


    Global equity markets finished higher for the week. In the U.S., the S&P 500 Index closed the Week at a level of 5223, representing an increase of 1.89%, while the Russell Midcap Index moved 0.02% last Week. Meanwhile, the Russell 2000 Index, a measure of the Nation’s smallest publicly traded firms, returned 1.21% over the Week. As developed international equity performance and emerging markets were higher, returning 1.80% and 0.99%, respectively. Finally, the 10-year U.S. Treasury yield moved lower, closing the Week at 4.50%.

    For all the mothers who are either customers or readers of this Update, we hope that Mother’s Day was an enjoyable day spent with family.
    As of the end of last week data sourced from FactSet shows that corporate earnings are trending positively in 10 of the 11 industry sectors that make up the S&P 500. For Q1 2024 (with 92% of S&P 500 companies reporting actual results), 78% of S&P 500 companies have reported a positive EPS surprise and 59% have reported a positive revenue surprise. The blended year-over-year earnings growth rate for the S&P 500 is 5.4%. If 5.4% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth rate reported by the index since Q2 2022 (5.8%). For Q2 2024, 51 S&P 500 companies have issued negative EPS guidance and 36 have issued positive EPS guidance. The forward 12-month P/E ratio for the S&P 500 is 20.4. This P/E ratio is above the 5-year average (19.1) and above the 10-year average (17.8).

    In the jobs market weekly jobless claims were higher than both the prior week and the consensus estimate with claims reaching 231,000. This result was 10.5% greater than the prior week.

    The University of Michigan Survey of Consumers Sentiment Index for May was released Friday. This closely watched index showed that consumer sentiment slumped as inflation expectations rose, despite otherwise strong signals in the economy. The initial reading of the index was 67.4, down from 77.2 in April and well off the consensus estimate of 76.0. This represented a one month decline of 12.7% and a decline of 14.2% from the prior May. The outlook for inflation within the survey also increased. The one-year outlook jumped to 3.5%, up 0.3% from a month age. Likewise, the five-year outlook also moved higher to 3.1%.

    Best wishes for the week ahead!

    Earnings data is sourced from FactSet. Jobless Claims are sourced from the U.S. Department of Labor. Consumer Sentiment Index is provided by the University of Michigan. Economic Calendar Data from Econoday as of 5/10/24. International developed markets are measured by the MSCI EAFE Index, emerging markets are measured by the MSCI EM Index, and U.S. Large Caps are defined by the S&P 500 Index. Sector performance is measured using the GICS methodology.

    Disclosures: Past performance does not guarantee future results. We have taken this information from sources that we believe to be reliable and accurate. Hennion and Walsh cannot guarantee the accuracy of said information and cannot be held liable. You cannot invest directly in an index. Diversification can help mitigate the risk and volatility in your portfolio but does not ensure a profit or guarantee against a loss.

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