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DJI, S&P 500 slightly positive, Nasdaq ~flat
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Industrials lead S&P 500 sector gainers; energy off most
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Dollar up; gold dips; crude off >1.5%; bitcoin off >4%
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U.S. 10-Year Treasury yield jumps to ~3.55%
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SELL IN MAY AND GO AWAY? READ THE BOTTOM LINE -ABLIN (1215 ET/1615 GMT)
The adage to sell in May and go away has a few flaws, according to many Wall Street sages, but Jack Ablin, chief investment strategist at Cresset Capital Management, poked through the data and found some interesting takeaways. Dividing the calendar into two six-month periods - from November through April and May through October - Ablin's research showed a stark difference in returns when evaluating the Dow Jones industrial average starting in 1900. "The results are striking. $1,000 invested only from May through October grew to $3,273 between April 1900 and October 2022," Ablin says in a note that said dividends were excluded in his study as they would be the same for both strategies. "Investing $1,000 between November through April expanded to a whopping $180,626 over the same timeframe," he said. Ablin acknowledged if there's a seasonal rationale to the outperformance, "we haven't discovered it," but breaking the results by decades also confirmed the trend, he said.
The November-April period consistently outperformed the
May-October period every decade since 1960, including April 2020
through November 2022, he said. Stocks rose through all six
decades and beginning of the 2020s in the November through April
period, but fell in the '70s and 2000s during the May through
October period, besides underperforming, his research showed.
To be sure, there's a caveat. Combining both periods showed
that $1,000 invested in 1900 would have grown to more than
$500,000, nearly double that of investing solely in November
through April.
"While the difference in performance is meaningful, it
underscores Cresset's belief in long-term investing for more
generous and predictable results," Ablin said.
(Herbert Lash)
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MAY DAY DATA: PMI, CONSTRUCTION SPENDING (1116 EDT/1516 GMT) The first of May is, of course, May Day. While it used to be an excuse to prance around maypoles and tying ribbons into knots, it since been rebranded a workers' holiday. In that spirit, this May Day brings us data from factories and construction sites. The first of any month - if it falls on a weekday - always means hearing about the state of American manufacturing, courtesy of the Institute for Supply Management's (ISM) purchasing manager's index (PMI) . ISM's PMI delivered a reading of 47.1, showed activity in U.S. factories contracted in April for the sixth consecutive month. However the contraction wasn't as steep as analysts predicted, gaining 0.8 point and landing north of the 46.8 consensus. Still, it fell 2.9 points short of the magical level of 50, the dividing line between monthly contraction and expansion. "New order rates remain sluggish as panelists remain concerned about when manufacturing growth will resume," writes Timothy Fiore, chair of ISM's manufacturing business surveys. "Panelists' comments registered a 1-to-1 ratio regarding optimism for future growth and continuing near-term demand declines." "Price instability remains and future demand is uncertain as companies continue to work down overdue deliveries and backlogs," adds Fiore. Commentary from survey participants accentuate both the positive and negative. Every "business conditions remain strong," and "sales and bookings (are) exceeding plans," is countered with "pricing pressures continue to plague daily operations," and "sales continue to be soft." Here's a look at select components of ISM PMI:
Not to be ignored, S&P Global also offered their take on March PMI , which landed at 50.2 - a tad weaker than the 50.4 advance "flash" reading released a couple weeks ago, but still clinging by its fingernails to the "expansion" side of 50. It showed that while new orders, output and employment improved, input and selling prices also increased - bad news for inflation worry warts. "US manufacturing output has regained some encouraging momentum at the start of the second quarter," says Chris Williamson, chief business economist at S&P Global. "The brightening demand picture was accompanied by a lifting of business confidence about the outlook and increased hiring." "The downside was a reigniting of inflationary pressures, with a stronger order book encouraging more firms to pass through higher costs to customers," Williamson adds. The dueling PMIs differ in the weight they allocate to various components (new orders, prices paid, employment, etc). Here's a look at the extent to which the two indexes agree (or not):
Finally, the Commerce Department would have us know that expenditures on U.S. construction projects increased by 0.3% in March, reversing February's 0.3% decline. It was a stronger print than the paltry 0.1% gain predicted by economists. Digging into the report's foundation, private sector and government construction spending both grew, gaining 0.3% and 0.2%, respectively. But home building continued to be a drag, dipping 0.2%, and outlays on transportation projects was the outlier, dropping 1.1% from February. Still, while spending on residential projects has been a drag on the topline since last June, that drag has grown weaker, reflecting the notion that the housing market has found its basement and is working its way back to ground-level. "Aside from the residential sector, which accounts for roughly half of total construction spending, the picture looks much healthier," says Michael Pearce, lead U.S. economist at Oxford Economics.
Wall Street is struggling for gains, with the S&P 500 and Dow Industrials just slightly green, while Nasdaq is modestly lower. FANGs and regional banks are among underperformers.
(Stephen Culp)
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U.S. STOCKS MIXED AHEAD OF KEY FED DECISION ON RATES (0955 EDT/1355 GMT) Stocks on Wall Street are mixed and little changed early on Monday as investors await a much-anticipated decision in two days on not only if the Federal Reserve raises interest rates by 25 basis points, but whether clues are provided for a similar hike in June. Industrials are leading the 11 S&P 500 sectors higher, while energy is the biggest decliner. Semiconductors , Dow Transports and small caps are also gaining, while value is outpacing growth . While a rate hike on Wednesday has essentially been a foregone conclusion - the probability of rates rising to the 5.00-5.25% range is 89.5%, according to CME Group's FedWatch Tool - chances of a June 14 hike are now 24.2%.
While many in the market still expect the Fed to begin cutting rates later this year, some believe Fed Chair Jerome Powell will cool that notion at Wednesday's press conference. Action Economics forecasts the start of the next rate-easing cycle to be postponed until the first quarter of 2024 and as a result, the month of May may disappoint, said Sam Stovall, chief investment strategist at CFRA Research in a note. Markets in Europe were closed for May Day.
The following is a snapshot of market prices in early trading:
(Herbert Lash)
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S&P 500 INDEX: PUFFED UP FOR WHAT COULD BE A PIVOTAL WEEK
(0900 EDT/1300 GMT)
The S&P 500 index ended Friday back above the weekly
Ichimoku cloud formation for the first time in more than a year.
Although seen as a bullish development, the benchmark index
still faces a cluster of major resistance hurdles not far above
Friday's 4,169.48 close, in a week permeated by a number of big
event risks:
Resistance resides at the Feb. 2 high at 4,195.44, the 23.6% Fibonacci retracement of the March 2020-January 2022 high, at 4,198.70, the 100-week moving average, which ended Friday at 4,202.92, and the August 26 Fed-Chair Powell Jackson Hole speech high, at 4,203.04. S&P 500 failures around 4,200 in late August of last year, and early February of this year, both led to sharp declines. From the late-August high, the SPX lost as much as 17% over the next 33 trading days (tds) as it declined to new lows into October. From the early-February peak, the SPX fell as much as 9.2% over the next 26 tds into its March low. Thus, traders will be keenly focused on this week's action, especially with the results of an FOMC meeting on Wednesday, Apple's quarterly report on Thursday and April jobs data on Friday.
(Terence Gabriel)
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SPX05012023 Early Market Pices ISM manufacturing PMI SP Global v ISM PMI Construction spending ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
