Week of April 18, 2022

In a holiday-shortened week, the U.S. equity markets experienced continued volatility last week with the S&P 500 and NASDAQ falling 2.1% and 2.6%, respectively, for their second consecutive weekly decline.  The Dow Jones Industrial Average fell 0.8% for its third consecutive weekly decline.

Investors remain concerned about rising inflation and how that may weigh on the economy, as the Federal Reserve struggles to keep a lid rising prices.  “The main challenge for the Fed will be to reduce the jobs-workers gap and slow wage growth at a pace consistent with its inflation goal by tightening financial conditions enough to reduce job openings without sharply rising unemployment,” said Goldman Sach’s chief economist Jan Hatzius.

Earnings season is off to a decent start with 77% of the S&P 500 companies reporting earnings per share above expectations according to FactSet.  Seven percent of the benchmark has reported results so far.  Market analysts believe first-quarter earnings will jump 5% for the quarter when all 500 companies finish reporting, according to FactSet’s analysis of actual results and future estimates.

“Our belief remains that 2022 estimated EPS (earnings per share) likely comes down a bit through earnings season, but likely less than we would have thought a month ago.  And the more U.S.-centric and more services-centric the company, the better the ESP outlook is likely to be,” said Travis McCourt of Raymond James.