IN THE MARKETS
Stocks recorded their third consecutive week of broad losses, as concerns over tensions in the Middle East and the possibility of U.S. interest rates remaining “higher for longer” appeared to weigh on sentiment. Mega-cap technology shares lagged as rising rates placed a higher theoretical discount on future earnings. A first-quarter revenue miss from advanced chipmaker supplier ASML Holdings also seemed to weigh on the sector and on general optimism toward companies with artificial intelligence (AI)-related earnings, according to traders. Small-caps continued to struggle, pushing the small-cap Russell 2000 Index further into negative territory for the year-to-date period.
The trading week started off on a strong note, which traders believed to be driven by relief that Iran’s well-telegraphed retaliatory strike on Israel did not result in worst-case scenarios, with nearly all missiles fired into the country intercepted by air defenses. However, hopes that Israel would carry out a measured response faded alongside stock prices as reports surfaced that the Israeli war cabinet had decided to retaliate “clearly and forcefully.” On Friday, stocks headed lower again, after Israel conducted strikes on air defense facilities within Iran, as well as on Iran-backed groups in Iran and Iraq.
U.S. MARKETS
The negative momentum continued across the board this week for the below indexes, with the S&P 500 losing over 3 percent and the Nasdaq declining over 5%. The Dow narrowly escaped losses while small and mid-cap both suffered more than 2 percent losses for the trading week.
DOW & TECH
The Dow slowed its loss streak this week with a narrow miss and the only index from the above list to avoid any loss. This week, the DJIA, gains were slim to end the week of Apr 19 at 37,986.40.
After a near half-percent loss last week, the tech-driven Nasdaq took on a considerable downward turn this week, reporting losses over 5%, closing at 15,282.01.
BY MARKET CAP
- Large Cap: Another down week for the S&P 500, the large-cap index declined again closing at 4,967.23.
- Mid Cap: The S&P 400 mid-cap continued the downward momentum this week, declining over 2% after its almost 3% slip last week. It closed this week at 2,836.88.
- Small Cap: For the third week in a row, the Russell 2000 saw losses, declining this time by over 2% and closing at 1,947.66.
COMMODOTIES / FUTURES
Gold, silver, and copper all enjoyed a strong week of gains while the indexes struggled. Copper was the leader last week with almost 2% gains, and again this week with double that. Crude Oil ended this week on a decline, dropping over 2.5% by market close on Friday.
LAST 52 WEEKS OF THE VOLITILIY INDEX (VIX)
VIX closed at 18.71 this week, a 8.09% increase over last week’s close of 17.31. This continues to be a possible indication that there’s more demand and options prices may continue to increase.
INTERNATIONAL MARKETS
U.S. MARKET NEWS
CONSUMERS CONTINUE SHOPPING, BUT HOUSING MARKET SHOWS SIGNS OF STRESS
Some strong economic data appeared to increase worries that the Federal Reserve would push back any interest rates cuts to the fall, if not to 2025. On Monday, the Commerce Department reported that retail sales rose 0.7% in March, well above consensus expectations of around 0.3%, while February’s gain was revised upward to 0.9%. Rising gas prices were partly at work (the data are not adjusted for inflation), but the strength was broad-based and included healthy gains in discretionary categories, such as restaurants and bars and online retailers.
Conversely, downward surprises in housing market data may have furthered inflation fears by auguring continued supply tightness. Housing starts and permits in March came in well below expectations and declined from February, with the former falling to the lowest level in seven months. Existing home sales also declined, although largely in line with expectations, as the average 30-year mortgage rate climbed above 7% for the first time since December.
FED SIGNALS RATE CUTS WILL WAIT IN RESPONSE TO DATA
As was the case the previous week, Fed officials expressed their concern with recent economic data. On Tuesday, Fed Chair Jerome Powell stated at an economic conference that “recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.” On Thursday, New York Fed President John Williams warned that a rate hike is not the baseline, but that one is possible if the data warrants. Atlanta Fed President Raphael Bostic said that policymakers would not be in a position to cut rates until the end of the year.
The retail sales data helped push the yield on the benchmark 10-year U.S. Treasury note to its highest intraday level since early November. (Bond prices and yields move in opposite directions.) Municipal bond yields also increased in the first half of the week alongside a flood of new issuance, but they held in well relative to Treasuries later in the week as most of the new deals were met with strong demand.
In the investment-grade corporate bond market, issuance was relatively light but met expectations, and most issues were oversubscribed. However, the higher-for-longer rates narrative and geopolitical tensions weighed on the high-yield bond market, and traders noted that trade volumes were somewhat above average as more sellers appeared to be active and high-yield funds industrywide reported negative flows.
INTERNATIONAL MARKET NEWS
EUROPE
In local currency terms, the pan-European STOXX Europe 600 Index ended 1.18% lower as tensions rose in the Middle East. Major stock indexes were mixed: Germany’s DAX fell 1.08%, Italy’s FTSE MIB gained 0.47%, and France’s CAC 40 Index was little changed. The UK’s FTSE 100 Index declined 1.25%. European government bond yields broadly climbed.
Consumer prices in the UK grew an annual 3.2% in March, down from 3.4% in February. Although the inflation rate fell to its lowest level in two and a half years, the decline was slightly less than forecast by analysts and the Bank of England (BoE) due to elevated price growth in fuel and communication goods. Services inflation—a measure of underlying price pressures that is watched closely by the BoE—remained high but slowed to 6.0% from 6.1%.
Wage growth also slowed less than expected in the three months through February. Excluding bonuses, pay increased 6% year over year, down from 6.1% in the preceding period. The unemployment rate rose sharply to 4.2% in February from 3.9%. Job vacancies continued to decline in the first quarter.
Higher oil prices and the somewhat sticky inflation data prompted financial markets to push out expectations for a first cut in UK interest rates from June to sometime in the fall. In contrast, BoE Governor David Bailey sounded more upbeat. “In the UK, we’re disinflating at what I call full employment,” he said at the International Monetary Fund’s (IMF) annual meeting. “I see, you know, strong evidence now that that process is working its way through.”
A slew of European Central Bank (ECB) policymakers at the IMF meeting reiterated that June was the likely target date for lowering borrowing costs, barring unexpected economic shocks. ECB President Christine Lagarde declined to say whether there might be more than one reduction in rates. In an interview with CNBC, she argued that policy should still depend on incoming economic data, given high levels of uncertainty. She added that the ECB would monitor oil prices “very closely” amid worries about conflict in the Middle East. In an interview with Bloomberg, Governing Council member Martins Kazaks also highlighted the uncertainty but added that the three to four rate cuts this year priced in by markets were in line with the bank’s economic outlook.
JAPAN
Amid an escalation in tensions in the Middle East, Japan’s stock markets suffered sizable losses over the week. The Nikkei 225 Index was down 6.2%, and the broader TOPIX Index lost 4.8%. An additional factor weighing on the markets was some concern about waning AI-related demand.
In fixed income, the yield on the 10-year Japanese government bond closed the week at around 0.84%, broadly unchanged from the prior week. Bank of Japan Governor Kazuo Ueda echoed previous comments in stating that, if weakness in the yen exerts significant upward pressure on inflation, a rate hike may be warranted.
In the foreign exchange markets, the yen, perceived as a safe-haven currency especially in times of geopolitical turmoil, strengthened on the final trading day of the week. It nevertheless continued to hover around 34-year lows and finished the period in the mid-JPY 154 against the U.S. dollar range, from the low-JPY153 range at the end of the previous week.
While speculation continued about Japanese authorities potentially intervening in the currency markets to prop up the yen, no such move was forthcoming. However, U.S., Japanese, and South Korean leaders met to discuss current conditions in the foreign exchange markets, focusing on the recent sharp depreciation of the Japanese yen and the South Korean won.
Japan’s exports rose 7.3% year on year in March, slightly slower than the 7.8% gain registered in February. The data print nevertheless marked the fourth consecutive month of growth in exports, attributable to the boost provided to Japan’s exporters by historic weakness in the yen. Signs of a pickup in Chinese demand also lent support.
In other economic data releases, the core consumer price index (CPI), a leading indicator of nationwide trends, was 2.6% higher year on year in March, slightly lower than had been expected and down from a revised 2.8% in February. While suggesting that price pressures could be easing somewhat, data showing that Japan’s inbound tourism grew solidly in March, driven by an increase in visitors from South Korea and China, is likely to support services inflation.
CHINA
Chinese equities rose after the economy expanded more than expected in the first quarter. The Shanghai Composite Index gained 1.52%, while the blue chip CSI 300 added 1.89%. In Hong Kong, the benchmark Hang Seng Index gave up 2.89% as escalating geopolitical tensions in the Middle East hurt investor sentiment.
China’s gross domestic product expanded an above-consensus 5.3% in the first quarter from a year ago, accelerating slightly from the 5.2% growth in last year’s fourth quarter. On a quarterly basis, the economy grew 1.6%, rising from the fourth quarter’s 1.4% expansion.
However, other data provided a mixed snapshot of the economy. Industrial production rose a lower-than-expected 4.5% in March from a year earlier, down from 7% growth in the January to February period. March retail sales grew a lower-than-expected 3.1% from a year ago as catering and auto revenue slowed after the Lunar New Year Holiday. Meanwhile, fixed asset investment rose more than forecast in the first quarter from a year ago, although property investment fell 9.5% year on year. The urban unemployment rate eased slightly to 5.2%, while the youth jobless rate stayed at 15.3% in March, unchanged from February.
On the monetary policy front, the People’s Bank of China injected RMB 100 billion into the banking system via its medium-term lending facility compared with RMB 170 billion in maturing loans and left the lending rate unchanged, as expected. The operation resulted in a net withdrawal of RMB 70 billion from the banking system, marking the second cash extraction this year.
HIGHLIGHTED STORY
https://posts.voronoiapp.com/economy/US-States-with-the-Highest-Real-GDP-Growth-in-2023-996
Top 10 States by Real GDP Growth in 2023
Fueled by strong consumer spending and a resilient job market, the U.S. economy expanded faster than expected in 2023, with a real GDP growth rate of 2.5%. Oil-rich states were among the strongest performers in the country as production boomed. Much of this was due to the war in Ukraine driving up the price of oil, spurring companies to boost output. Other sectors, such as retail trade, also played a key role in driving growth amid robust consumer demand.
The graphic below shows the fastest growing states by real GDP, based on data from the Bureau of Economic Analysis.
Strongest State Economies in 2023
As the world’s largest oil producer, the U.S. hit a historic 12.9 million barrels per day in crude oil production in 2023—more than any other country ever. Given these tailwinds, the top five fastest-growing states by real GDP in 2023 were all powered by the mining, quarrying, and oil and gas extraction sector.
Below, we show the strongest state economies by real GDP growth last year:
North Dakota witnessed the highest growth, with real GDP rising by 5.9%. As the third largest oil-producing state, it also has one of the strongest job markets in the country. In February 2024, the state’s unemployment rate was 2.0%, significantly lower than the national average of 3.9%.
Falling in second is Texas, whose economy surged to $2 trillion in inflation-adjusted terms. In 2023, the oil and gas industry generated about $72 million per day in local and state taxes in addition to state royalties. Roughly half of U.S. crude oil exports are shipped from Corpus Christi Bay, a port along the Texas coastline.
As the seventh-fastest growing state, Florida’s economy was largely supported by retail trade, its biggest driver. Moreover, Florida boasted the highest growth rates nationwide in both personal and property income, rising at 7.0% and 8.8%, respectively, over the year.
By contrast, some of the slowest-growing states were Delaware, Mississippi, and New York, each with a real GDP growth rate falling below 1%.
ADDITIONAL ECONOMIC HIGHLIGHT
https://www.visualcapitalist.com/ranked-the-largest-u-s-corporations-by-number-of-employees/
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