Steps in the Right Direction?

Equities saw a shortened trading week, due to Good Friday, and volatility and mixed results were the general theme. The S&P 500 fell -0.10%, the Dow Jones rose 0.63%, and the NASDAQ fell -1.10%. Bond markets rose, in general, with the Bloomberg Agg ending up 0.80%. Alternatives continued to be mixed in the flight to safety, with Bitcoin futures down -1.18%, gold up 2.02%, and silver up 3.88%. The standout last week was oil, which saw WTI crude jump 9.36% following the OPEC+ supply cut announcement.

As markets move towards earnings season, we have our eyes focused on company guidance during changing economic conditions. Looking at the past week, seasonally adjusted non-farm payrolls were released Friday and missed expectations, with 236k jobs added—this is down from 326k jobs in the previous report. Initial and continuing jobless claims were released Thursday, and initial claims come in over consensus at 228k while continuing claims sharply surprised at 1,823k vs the consensus of 1,697k. Continuing claims have been slowly ticking upwards this year after hitting lows in mid-2022. Lastly, Tuesday saw factory orders and Durable goods orders (both seasonally adjusted, month-over-month). Factory orders saw a downward surprise with a -0.70% decrease, while durable goods met consensus coming in down -1.0%.

This week is slated to bring eyes on economic reports, with CPI printing Wednesday morning and FOMC meeting minutes releasing in the afternoon. The trend should continue into Thursday, with PPI data and jobless claims being released, followed by Friday retail sales. CPI will be hotly watched to see what impact continued Fed policy action is having on inflation. Core CPI (ex. Food and Energy, month-over-month, seasonally adjusted) is expected to come in lower at 0.40%, while headline CPI (month-over-month, seasonally adjusted) is expected to come in lower, as well, at 0.25%. The FOMC minutes later in the day are expected to bring insight into Fed discussions around monetary policy and, especially, into concerns over banking stability that was a key feature during the March meeting. PPI data (Seasonally Adjusted, month-over-month) is expected to come in flat following a slight decrease with the last print. The PPI gives insight into inflation experienced on goods production vs consumer inflation in a measure like CPI. Finally, Friday brings retail sales data. The month-over-month, seasonally adjusted retail sales numbers expected to come in at -0.3% on weaking consumer demand.

In geopolitical events, China conducted a three-day series of military drills off of Taiwan, as a show against Taiwan independence. In the war in Ukraine, purported US defense intel leaked that covered casualty estimates for the war, intelligence gathering activity, and estimations for a possible Ukrainian spring offensive. In the United States, US District Court Judge Matthew Kacsmaryk ruled to suspend the FDA approval of Mifepristone, a popular abortion drug, following a one-week stay to allow for appeal. This was followed by a Washington Federal Judge ruling the FDA must keep abortion drugs accessible in 12 states. The split court decisions and all-but-certain appeals leave policy and law uncertain.

Markets should get some direction this week, as reports will show how the Fed’s inflation and employment mandate competition is playing out. Entering earnings season on a week punctuated by economic data leads us to want guidance as we look to meet our financial goals. Although no man knows for certain how markets will move, we listen for His directions guiding our steps as Isaiah 30:21 reminds us, “Whether you turn to the right or to the left, your ears will hear a voice behind you, saying, ‘This is the way; walk in it’.”

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