Tech check

  • Tech surge helps propel market to winning week and month
  • Bank story re-emerges, oil rebounds after sell-off
  • This week: Fed rate decision, jobs report, chip earnings

Stocks managed to shake off some rust last week—sort of.

It may not have been the market’s biggest weekly gain, but Big Tech earnings, GDP, a bank-sector aftershock, and a Fed inflation report triggered a little more day-to-day activity than the market has seen in recent weeks.

The S&P 500 (SPX) slid to a new low for April last Wednesday after a sell-off in First Republic Bank (FRC) weighed on market sentiment, but rebounded on Thursday–Friday despite a softer-than-expected Q1 GDP number and a middle-of-the-road PCE Price Index inflation reading. It ended the week with its highest close since February 2:

Chart 1: S&P 500 (SPX), 3/1/23–4/28/23. S&P 500 (SPX) price chart. Up week, up month.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.) Note: It is not possible to directly invest in an index.

The headline: Tech gives market late-month boost.

The fine print: As of last Wednesday, the SPX was in the red for April and had closed above its March 31 close nine times and closed below it eight times. Thursday’s 1.96% jump (and Friday’s follow-through rally) flipped the week and month from negative to positive.

The number: 2, as in two Big Tech stocks (Microsoft and Meta) staged strong rallies after releasing earnings, and two (Alphabet and Amazon) declined.

The move: FRC fell 49% on Tuesday, 30% on Wednesday, and 43% on Friday, rekindling concerns about the banking sector. On Friday, reports emerged that Federal regulators would take control of the bank, as they did Silicon Vally Bank and Signature Bank.1

The scorecard: The Nasdaq 100 (NDX) tech index closed at its highest level since last August, and pushed its year-to-date gain back above 20%:

US stock index performance for week ending 4/28/23. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector returns: The strongest S&P 500 sectors last week were communication services (+3.8%), information technology (+2.4%), and real estate (+1.5%). The weakest sectors were utilities (-1%), industrials (-0.63%), and health care (-0.59%).

Stock movers: Ideaya Biosciences (IDYA) +36% to $20.26 on Monday, The Aaron’s Company (AAN) +23% to $12.62 on Tuesday. On the downside (besides FRC), Impinj (PI) -39% to $82.47 on Thursday, Addus Homecare Corp Com (ADUS) -28% to $81.74 on Friday.

Futures: Last Thursday, June WTI crude oil (CLM3) hit a one-month low of $74.03, but jumped more than 2.5% on Friday to close at $76.78. June gold (GCM3) closed out a quiet, sideways week slightly lower at $1,999.10. Week’s biggest up moves: July sugar (SBN3) +8.3%, April Micro bitcoin (MBTJ3) +6.9%. Week’s biggest down moves: July oats (ZON3) -7.3%, June palladium (PAM3) -7%.

Coming this week

The economic calendar features a Fed interest rate announcement and the monthly jobs report, but that just scratches the surface of a busy week:

Monday: S&P Global Manufacturing PMI, ISM Manufacturing Index, Construction Spending
Tuesday: Job Openings and Labor Turnover Survey (JOLTS), Factory Orders, Vehicle Sales
Wednesday: ADP Employment Change, S&P Global Services PMI, ISM Services Index, Fed interest rate announcement
Thursday: Challenger Job Cuts, Trade Balance, Productivity and Labor Costs
Friday: Employment Report, Consumer Credit Change, Used Car Prices

Semiconductor and solar earnings highlight another packed week of earnings. A few highlights:

Monday: Check Point Software (CHKP), ON Semiconductor (ON), Arista Networks (ANET), Lattice Semiconductor (LSCC), NXP Semiconductors (NXPI), Rambus (RMBS), Vertex Pharmaceuticals (VRTX)
Tuesday: Pfizer (PFE), Uber (UBER), Airbnb (ABNB), Advanced Micro Devices (AMD), Clorox (CLX), Ford (F), Livent (LTHM), Match (MTCH), Paycom (PAYC), Starbucks (SBUX)
Wednesday: CVS Health (CVS), Barrick Gold (GOLD), Phillips 66 (PSX), SunPower (SPWR), Verisk Analytics (VRSK), World Wrestling Entertainment (WWE), Yum Brands (YUM), Etsy (ETSY), Qualcomm (QCOM), Qorvo (QRVO), Sunrun (RUN), SolarEdge (SEDG), Sarepta Therapeutics (SRPT)
Thursday: Datadog (DDOG), Hyatt Hotels (H), Kellogg (K), Lithium Americas (LAC), Martin Marietta (MLM), Moderna (MRNA), Intellia Therapeutics (NTLA), Vulcan Materials (VMC), Wayfair (W), XPO (XPO), Apple (AAPL), Booking Holdings (BKNG), Bumble (BMBL), Coinbase (COIN), Dropbox (DBX), Lyft (LYFT), Shopify (SHOP), Block (SQ)
Friday: EPAM Systems (EPAM), Ubiquiti (UI)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

To go away, or not go away

Thanks to last week’s late rally, the SPX squeezed out a par-for-the-course 1.5% return. Traders wondering whether May will also track its historical average need to keep in mind this month kicks off with a Fed rate announcement and could end with a debt-ceiling showdown. And the bulk of earnings season is yet to come. In other words, every month and year is different.

But May’s relatively recent (since 1985) history hasn’t really jibed with the bit of market wisdom that advises investors to “Sell in May and go away,” reflecting the stock market’s supposed tendency to rack up most of its gains before the clock runs out on April.

Although the average down May (-3.7%) has been larger than average up May (+2.7%), the month has been positive for the SPX in 29 of the past 38 years, with all of the losses occurring since 1998:

Chart 3: S&P 500 May returns, 1985–2022. May positive 29 of past 38 years.

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.) Note: It is not possible to directly invest in an index.

That ties May with December for the highest percentage of positive returns (76%) since 1985, although May’s overall average return of 1.2% was just the fifth-highest out of all months of the year during that period.


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1 First Republic most likely headed for FDIC receivership, sources say; shares drop 30%. 4/28/23.
2 Reflects S&P 500 (SPX) monthly closing prices, January 1985–2022. Supporting document available upon request.

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