Macrosynthesis
Last Week's Recap
Last Friday, the US stock market experienced a downward trend, echoing the performance of global markets as concerns about a possible recession intensified due to the continuation of tightened monetary policy. These worries put pressure on crude oil prices, resulting in all three major US stock indexes finishing lower.
The Dow Jones recorded a decline of 219 points, while the S&P 500 and the Nasdaq saw losses of 0.7% and 1% respectively.
Last week, Federal Reserve Chair Powell made remarks indicating that the central bank could raise rates a few more times before the year's end.
Regarding economic data, the latest PMI for the US indicated that the services sector remained robust in the previous month. However, the manufacturing sector experienced its largest decline of the year so far, surpassing expectations. In Europe, PMI data revealed that the region's economy appeared weaker than expected.
Exxon Mobil and Chevron both suffered a 0.8% drop, while Nvidia and Microsoft saw decreases of 1.9% and 1.4% respectively. Overall, the three major benchmark indexes concluded the week with losses. The Dow declined by 2%, while the S&P 500 and the Nasdaq dropped by 1.8% and 2% respectively.
Looking ahead to the upcoming week
In the United States, investors will pay close attention to the personal income and outlays report. Forecasts suggest that consumer spending growth may have slowed down to 0.2%, while income is anticipated to show steady growth at 0.4%.
Additionally, the PCE price index is expected to indicate a slight easing of price pressures in May. Investors will also be keenly observing the release of the Federal Reserve's stress test results on Wednesday to gauge the resilience of banks.
The Situation in Japan
In May, Japan's core consumer inflation surpassed expectations, while an index excluding fuel costs saw the fastest annual growth in 42 years. The rise in inflation was primarily attributed to steady price increases for food and daily necessities. This development highlights the broadening pressure on prices and puts the central bank in a challenging position to gradually withdraw its extensive stimulus measures. Analysts suggest that the rising cost of living may impede household consumption.
Argentina and the IMF
A group of Latin American presidents, including those from Brazil, Bolivia, Chile, Colombia, Mexico, and Paraguay, have requested US President Joe Biden's support for Argentina in its ongoing negotiations with the International Monetary Fund (IMF) regarding a $44 billion program. In a letter addressed to Biden, the presidents expressed their plea, which was acknowledged and appreciated by Argentina's President Alberto Fernandez.
Russian Civil War?
A Russian conflict erupted between a mercenary group employed by Russia to attack Ukraine, the Wagner Group, and Russian President Putin. In what appeared the stuff of movies, a convoy of 25,000 mercenaries was headed to Moscow for revenge, following a Russian friendly fire incident that allegedly killed many mercenaries.
The potential coup led Putin to leave Moscow, though the Wagner group ultimately decided to stand down their march towards the Russian capital and take the troops to Belarus instead.
Last Week's Top Events
Noteworthy Events
CarMax
CarMax, the used-car retailer, experienced a 10% increase in its stock price Friday following the announcement of its first-quarter revenue. The company exceeded analysts' expectations by reporting $7.69 billion in revenue, surpassing the anticipated $7.49 billion.
- +21.39% (1-Month)
- +42.68% (6-Month)
C3.AI
C3.ai, a major beneficiary of artificial intelligence, saw its shares decline by over 10.8% after Deutsche Bank reaffirmed its sell rating following the company's investor day. The bank expressed the need for more confidence in leading indicators, the scale of new deals, and evidence of sustained business growth before revising its rating.
- -31.08% (1-Week)
- +17.53 (1-Month)
- +221.06% (6-Month)
To the Moon?
Virgin Galactic's stock price dropped by -18% after announcing a $300 million capital raise through a stock offering. The space tourism company intends to utilize the funds to expand its fleet of spacecraft. Additionally, Virgin Galactic revealed plans to raise an additional $400 million to support its spacecraft expansion efforts further. This occurred on the heels of the company announcing they will be sending their first space tourists into orbit soon.
- -24%% (1-Week)
- +31.91% (6-Month)
Starbucks
Starbucks witnessed a decline of nearly -2.5% in its stock price following the announcement by a worker union that strikes are set to commence due to allegations that the coffee chain is preventing Pride decorations at its cafes. The union stated that over 150 stores and approximately 3,500 workers plan to participate in the strike over the next week.
- -3.55% (1-Week)
- +25.90% (1-Year)
Rocket Mortgage
Home buyers can put as little as 1% down as payment for a home under the program ONE+, launched by Rocket Mortgage, RKT.
- -6.92% (1-Week)
- +25.33% (6-Month)
CASE STUDY: Smith & Wesson Brands
Smith & Wesson Brands, Inc. (SWBI) experienced an +8.4% increase in its shares during pre-market trading on Friday as the company announced better-than-expected results for its fourth quarter. In addition, SWBI raised its quarterly dividend from $0.10 to $0.12 per share.
Smith & Wesson Brands is known as a manufacturer of firearms and a supplier of accessory products catering to the shooting, hunting, and outdoor enthusiast market.
After LevelFields Users were alerted to the Dividend Increase at 6:39 am on Friday, SWBI rose another 13.05%. SWBI is up over 56% in the last six months.
Upcoming Catalysts:
Notable Earnings
Monday
- Carnival Cruises (CCL)
Tuesday
- Walgreens
Wednesday
- Blackberry (BB)
- General Mills (GIS)
Thursday
- Nike (NKE)
- Acuity Brands (AYI)
- Lindsay (LNN)
Friday
- Constellation Brands (STZ)
Economic Reports
Tuesday
- New Home Sales
Wednesday
- Fed Chair Powell Speaks
- Fed Bank Stress Test
- Retail Inventories
Thursday
- Fed Chair Powell Speaks
- Jobless Claims
- Q1 GDP Data
Friday
- Core PCE Inflation Data
This is not financial advice. All information represent opinions only for informational purposes.
The LevelFields Team