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Gradient Investments Weekly Talking Points 05/09/2022
All data is for the week ended May 6, 2022.
Stocks
In a very volatile week, the broad US stock market (S&P 500) declined slightly, by 0.18%. The Russell 2000 dropped 1.29% and the tech-heavy NASDAQ lost 1.50%. Overseas, the developed markets (MSCI EAFE) was down 2.78% while the emerging markets index (MSCI EM) dropped 4.12%. Within the US, the best performing sectors were energy and utilities while real estate and consumer discretionary were the laggards. Value outperformed growth.1
Fixed Income
It was well anticipated that the Federal Reserve would increase its fed funds target range last week by 50 basis points (or 0.50%) to 0.75-1.00%. This follows the Fed’s decision in March to raise its rate by 25 basis points.2 The Fed chair also stated that the next rate increase, in June, is anticipated at 50 basis points as the board did not see the need for more aggressive rate hikes.3 The benchmark 10-year treasury bond finished the week with a 3.12% yield, up 23 basis points.4
Commodities
The price of West Texas crude oil rose 4.85% last week following the European Commission’s decision to place an embargo on Russian crude oil in six months. This decision is positive for oil prices because it lowers the available supply. West Texas crude finished the week at $109.77 per barrel. 5
Economic Data
The unemployment rate was steady for April at 3.6%. Job openings currently sit at 11.5 million while the number of unemployed persons stands at 5.9 million – that’s 1.9x openings for every American looking for a job.1
Company News6
BP p.l.c. (BP), a G40i and Energy Sector Focus holding, reported earnings that exceeded consensus estimates and increased their share buyback program by $2.5 billion on top of the $1.6 billion executed in the prior quarter.7 Shares rose 10.93% for the week.
Bank of America (BAC), a G50, Core Select and Contrarian Choice holding, reported that growth in purchases on its debit and credit cards advanced 13% on a year over year basis during April as consumers continued to spend at a pace well ahead of inflation. Notably, spending at airlines and travel agencies surged 60% in that time.8 Shares rose 4.96% for the week.
ConocoPhillips (COP), a Core Select and Energy Sector Focus holding, reported earnings that exceeded expectations. Additionally, the board increased its dividend and raised their share buyback program by $2 billion.9 Shares rose 12.74% for the week.
Did you know…
The most famous traitor in American history is Benedict Arnold. But before he turned to join the British, he was an accomplished major general on the American side in the Revolution. In the Saratoga National Memorial Park in New York state there is a Boot Memorial with an inscription tells the story of how he was “the ‘most brilliant soldier”, credited with “winning for his countrymen the decisive battle of the American Revolution.” Due to his treason, the identity of the “most brilliant soldier” is omitted.
Mariann Montagne, CFA
Portfolio Manager
Sources:
1 JP Morgan Weekly Market Recap 5-9-22
2 Federal Reserve press release 5-2-22
3 Barron’s, “How the Fed Chief Soothed the Markets” 5-4-22
5 oilprice.com “Oil Prices Underpinned by Supply Jitters“ 5-6-22
6 All weekly changes in company stock prices: Yahoo Finance
7 BP p.l.c. press release 5-3-22
8 Bank of America Institute press release 5-5-22
9 ConocoPhillips press release 5-5-22
Advisory services are offered through American Retirement Advisors, Inc., a Registered Investment Advisor in the State of Michigan. Insurance products and services are offered through American Retirement Solutions an affiliated company. American Retirement Advisors, Inc. and American Retirement Solutions are not affiliated with or endorsed by the Social Security Administration or any government agency. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the State of Michigan or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. Moreover, this material has been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
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