Economic Market Summary

Market Down and Dirty

Last Week’s Economic/Market Summary


  • U.S. equities finished the week higher on Tech strength & debt ceiling optimism.
    • S&P 500 +1.71% Dow +0.38% Russell 2000 +1.96%, Nasdaq +3.08%1
      • The All-Country World Index gained +1.11%.1
    • S&P 500 sub-sectors were mostly higher last week.
      • Tech, Financials, & Consumer Discretionary led to the upside. 1
      • Utilities, Real Estate, & Staples led to the downside. 1
    • The CBOE Volatility Index (VIX) declined 1.7% to end at 16.73. 1
  • US Treasury bond yields were higher last week across the yield curve.
    • US 2yr +0.30% at 4.28%, 10yr +0.24% to 3.70%, 30yr +0.18% to 3.95%.1
    • Yields have climbed to levels last seen in March on the back of sticky inflation data.
  • Commodities as an aggregate asset class moved lower last week.
    • WTI Crude rose +2.33%.1
    • Gold declined -1.67%.1
    • The US Dollar index gained +0.49%.1
  • In our opinion, U.S. economic data continued to be mixed last week.
    • US retail sales returned to growth albeit lower than expected. 1
    • Total US household debt hit a record high of $17.05 trillion. 1
    • Homebuilder sentiment turned positive for the first time in almost a year. 1
  • An index of equities outside the US (FTSE All-World ex-US) increased +0.72 last week. 1


  • US Equities broke from the recent trend of sideways trading to see nice moves higher despite sticky inflation, higher for longer Fed interest rates, & the debt ceiling negotiations waffling.
      • The Nasdaq led to the upside by a wide margin with a gain of over 3%.1
      • The large and widespread layoffs at big tech companies seem to have only helped to increase profit margins.
      • The AI narrative also gives hope to the concept that larger companies will see increased profit margins going forward.
    • A large amount of short-dated call options on some of the biggest tech names has ramped up recently, forcing dealers to continue to buy shares to hedge exposure & driving major components of the Nasdaq higher.
      • One of the YTD best performers, Nvidia, is now trading at 29x sales and 182x earnings on the back of this rush for AI exposed firms. 1
    • The broader S&P 500 rose 1.7% last week for its best month since March. 1
      • It briefly touched the 4,200 level once again before retreating lower.
  • S&P 500 subsectors were mostly higher last week.
    • The AI hype helped Tech & Consumer Discretionary lead sectors higher.
    • Interest rate sensitive areas of the market led to the downside as rising rates seemed to hurt Utilities, Staples, & Real Estate. 1
  • US Treasury yields were higher across the yield curve last week.
    • As inflation remains sticky, there’s a risk that yields could continue to move higher as the economy doesn’t slow enough to bring down inflation.
    • Even with a pause by the Fed next month, it may not be enough to bring down yields.
      • Expectations for a June rate hike by the Fed have jumped from 2% to 33% in a week. 1
    • Debt ceiling negotiations are on-going with mixed messages coming out of DC.
      • This is a big week as any agreement now would likely face pressure getting passed by the June 1st deadline floated by Treasury Secretary Yellen.
  • International equity markets moved generally higher last week despite a gauge of the dollar’s strength touched a two-month high1, boosted by haven demand and stronger expectations for Fed hikes.
    • The Japanese stock market hit its highest level in 33 years last week while the German DAX index hit all-time highs. 1
    • China’s industrial output, retail sales and fixed investment grew at a much slower pace than expected in April. 1
      • A major worry was the jump in the unemployment rate for young people to a record high of 20.4%, a sign that the post-pandemic recovery isn’t strong enough. 1
  • The S&P 500’s price-earnings multiples over the past three decades have averaged 20, and dividing that ratio by today’s index level would give a market-implied profit target of roughly $221 a share. 1
    • That’s much lower than the $242 expected by analysts tracked by Bloomberg Intelligence. 1
    • Back to soft landing vs no landing vs hard landing…we’ll continue to let the data point the way.

Ryan A. Mumy, CFP®,

AIF® – Chief Investment Officer

Contact: 828/855-9400 or 

 1 Source: Bloomberg – 5/19/2023 

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