Market Updates Archive
Week Ending on Friday, January 27th
Published January 30, 2023
Overall, the US and non-US stock markets saw a strong week with all indexes finishing positive for both the week and the month of January. While the three US indexes are positive, the tech-heavy NASDAQ 100 Index now leads the group while the Dow Jones 30 Index fell to last place. In 2022, these roles were reversed with the NASDAQ 100 Index taking the biggest loss and the Dow Jones 30 Index leading the pack. The non-US stock markets also continue to perform well in 2023.
While corporate earnings were mixed, other economic news was more positive with personal income up, pending home sales were higher and consumer sentiment was revised upward. On the inflation front, the Federal Reserve’s preferred measure of inflation (Personal Consumption Expenditures) cooled further rising at an annual rate of 5.0% versus 5.5% last month. Lastly, the first look at 4th quarter GDP marked the second quarter in a row of positive results with an annualized growth rate of 2.90% beating most economists’ estimates.
Below are the results for the calendar year 2022 and the first four weeks of 2023.
| Index | Daily Returns (January 23rd – January 27th) | Weekly Return |
January Return | 2022 Return | ||||
|---|---|---|---|---|---|---|---|---|
| Mon. | Tue. | Wed. | Thu. | Fri. | ||||
| S&P 500 | +1.20% | –0.11% | +0.04% | +1.10% | +0.23% | +2.48% | +6.08% | –18.17% |
| NASDAQ 100 | +2.22% | –0.20% | –0.22% | +1.95% | +1.00% | +4.80% | +11.26% | –32.58% |
| Dow Jones 30 | +0.75% | +0.28% | +0.07% | +0.60% | +0.07% | +1.78% | +2.59% | –7.01% |
| Developed Non-US | +0.41% | –0.13% | +0.66% | +0.08% | –0.20% | +0.83% | +9.08% | –14.35% |
| Emerging Markets | +0.72% | +0.07% | +0.10% | +0.95% | –0.47% | +1.37% | +11.61% | –20.56% |
MBA Mortgage Market Index
The Mortgage Bankers Association (MBA) Mortgage Market Index, a weekly measurement of nationwide home loan applications, spiked upward 7% last week and is the highest reading since last September. Applications to re-finance surged 14.6% as mortgage rates fell slightly. Applications to purchase a home rose 3.4% but were still 39% lowers than a year ago. If mortgage rates continue to fall and home prices cool further, MBA expects home buyers to come back into the market.
Durable Goods Orders
The US Census Bureau conducts a monthly survey of manufacturers and other supply chain participants to estimate current and future industrial activity. For the month of December, durable goods orders increased 5.6%, which is indicative of an expanding economy. Upon closer examination, much of the good news in the durable goods number was caused by significantly higher airplane orders for Boeing. When transportation orders were removed, durable goods orders declined slightly in December. Data provided by the Federal Reserve shows that total industrial production peaked last September.
4th Quarter GDP
Headlines for the 4th quarter GDP report last week implied that the economy was stronger than expected as the annualized growth rate of 2.9% exceeded expectations. Economists noted that the US economy appears to have slowed into the end of 2022 as housing and exports slid while GDP positives included increased government spending and a significant build-up in inventories. Overall, 4th quarter GDP was supported by increased consumer spending, inventory replenishment and higher federal government spending which is not an optimal mix for further strong growth in 2023.
Earnings Reports
The following are some key company earnings results.
Microsoft (MSFT) reported earnings last week beating on most metrics, but the stock was mixed as analysts question guidance which shows some key contributors to Microsoft’s bottom line slowing. Specifically, Microsoft’s cloud computing platform Azure has missed growth estimates for the last two quarters.
Johnson & Johnson (JNJ) reported better than expected profits but missed on sales due to the appreciated US dollar and reduced COVID-19 vaccine sales. Investors expect 2023 to be a slightly better year and hope for more clarity on the spin-off of the consumer health care division (now renamed Kenvue).
Chevron (CVX) reported results last week where profits missed but sales exceeded expectations. Reasons for the profit miss included lower oil prices and a $1.1 billion write down of its international business. CVX also increased its dividend 6.0% and announced it will repurchase up to $75 billion of its common shares.
Tesla (TSLA) reported higher than expected profits and in-line sales for the most recent quarter with growth of 37.2% year-over-year, however gross margin declined slightly to 25.9%. 4th quarter deliveries were a record 405,278.
Union Pacific Railroad (UNP) missed on both the top line and bottom line for the 4th quarter with almost every business metric declining such as miles per freight car, locomotive productivity, and average maximum train length. Declining railroad activity may be viewed as a negative leading economic indicator.
Something Completely Different
While the call for student debt elimination has lessened since the mid-term elections, two states are making it easier to find a great job without the one-size fits all college degree. Larry Hogan, Governor of Maryland, and Josh Shapiro, Governor of Pennsylvania, have removed the four-year college degree requirements for most state jobs making it easier for many unemployed or under-employed workers to find long-term careers with the state which also provide meaningful benefits including health care. Many see this move gaining momentum as many jobs can be performed without a conventional college degree which may be out of reach for many due to cost.