Earnings in Focus

The S&P 500 finished the week higher and has now gained in four of the past five weeks.

April 17, 2023    |    By Michael Schwager

Performance for Week Ending 4.14.2023:

The Dow Jones Industrial Average (Dow) finished up 1.20%, the Wilshire 5000 Total Market IndexSM (Wilshire 5000SM) added 0.90%, the Standard & Poor’s 500 Index (S&P 500) gained 0.79%, and the Nasdaq Composite Index (NASDAQ) tacked on 0.29%. Sector breadth was mixed with seven of the S&P sector groups closing the week higher and four closing lower. The Financials sector (+2.86%) was the best performer while the Real Estate sector (-1.45%) was the biggest laggard.

Index* Closing Price 4/14/2023 Percentage Change for Week Ending 4/14/2023 Year-to-Date Percentage Change Through 4/14/2023
Dow 33886.47 +1.20% +2.23%
Wilshire 5000 40870.25 +0.90% +7.34%
S&P 500 4137.64 +0.79% +7.77%
NASDAQ 12123.47 +0.29% +15.83%

*See below for Index Definitions

MARKET OBSERVATIONS: 4/10/23 – 4/14/23

The S&P 500 finished the week higher and has now gained in four of the past five weeks. The gains followed reports showing inflation pressure, while still elevated, continued to ease. The Labor Department reported that the headline CPI increased 0.1% month-over-month in March but was weaker than the consensus expectation for 0.2% gain. Excluding food and energy, the core CPI increased 0.4% m/m, on target with economists’ expectations. On a year-over-year basis the headline CPI grew by 5.0% (down from 6.0% in February) while the core rate expanded by 5.6% (up from 5.5% in the prior month). Meanwhile, the headline producer price index (PPI) fell 0.5% month-over-month in March, well below the consensus forecast for a 0.1% decline. The monthly decline was the largest since April 2020, and headline prices have now fallen on average through the first three months of the year, compared to 1.2% increases in early 2022. Supply chain conditions and the impact from the war in Ukraine that plagued early 2022 have diminished, allowing producer prices to fall. The monthly decline to headline producer prices pushed the year-over-year inflation rate to 2.7%, the lowest level since January 2021 and a fraction of the 11.5% peak in March 2022. While that decline has mostly been due to weaker contributions from energy and trade services prices, the annual inflation rate for core prices has fallen to 3.6%, the lowest since February 2021. While the reports show an easing in inflation pressure, a report from the University of Michigan showed consumers are expecting a higher pace of inflation over the coming year. As per the report, one year inflation expectations rose to 4.6% versus 3.6% last month. Longer term (5-10 years) inflation expectations were unchanged at 2.9%.

Fed speak: Chicago Fed President Austan Goolsbee sounded mildly dovish last week by stating that the U.S. central bank should exercise “prudence and patience” in raising interest rates as policymakers assess just how much last month’s banking turmoil will contribute to tighter lending conditions. Speaking at the Economic Club of Chicago, Goolsbee said that “given how uncertainty abounds about where these financial headwinds are going, I think we need to be cautious,” adding that “we should gather further data and be careful about raising rates too aggressively until we see how much work the headwinds are doing for us in getting down inflation.” Echoing Goolsbee’s comments, San Francisco Fed President Mary Daly said that more hikes to interest rates might not be needed to slow inflation. “Looking ahead, there are good reasons to think that policy may have to tighten more to bring inflation down,” Daly said in prepared remarks for an event at the Salt Lake Chamber in Utah. “But there are also good reasons to think that the economy may continue to slow, even without additional policy adjustments.”

Q1 Earnings Season: First quarter earnings season kicked off in earnest last week, and while it’s still very early results have, so far, exceeded expectations.  The bar heading into earnings season has been set very low with analysts expecting about an eight percent decline when all is said and done. Through Friday, 28 members of the S&P 500 have released results with 89% exceeding expectations.  Aggregate earnings for the group are up 7.8% while revenues are up by nearly 11%. On Friday, investors breathed a sigh of relief when banking giant JP Morgan reported better than expected first quarter results. In a press release accompanying the earnings report, CEO Jamie Dimon noted that the economy continued to be on generally healthy footing with consumer still spending and businesses in good shape. Wells Fargo, Citigroup and PNC Financial also reported better than forecast results.

FOMC Meeting Minutes: The release of the March FOMC meeting minutes gave us some clarity on last month’s gathering. The minutes said that “several participants considered whether it would be appropriate to hold the target range steady.” At the other end of the spectrum there were “some” participants who, without the banking turmoil “would have considered a 50bp increase. In Fed parlance, “several” trumps “some,” although in the end, the decision to hike rates by 25bp ended up being unanimous, with those considering no change comforted by the signs of stabilization in the markets in the days leading up to the FOMC meeting. Inflation was still seen as unacceptably high and that there had been little evidence showing disinflation in core services excluding housing. Also of note, the Fed’s staff projected a mild recession starting later this year due to the impacts from the banking stresses. A downturn in growth was only seen as a "possibility" at the February meeting.

The Week Ahead: Earnings season will move to the front burner with 237 S&P 500 companies scheduled to release results over the next two weeks. Housing and manufacturing will be the focal point of the data calendar. Reports of interest include the April Empire Manufacturing data, building permits and housing starts for March, the Philly Fed Index for April, existing home sales during March and the March leading index of economic indicators. It will be a busy week on the Fed front with eight Fed officials scheduled to speak. The Fed will also release its Beige Book report on Wednesday.


The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market IndexSM represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500© Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The NASDAQ Composite Index is a broad-based capitalization-weighted index of stocks in all three NASDAQ tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

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