Stocks Close Modestly Lower, Earnings Season Officially Begins This Week Image: Bigstock Stocks closed modestly lower yesterday after seeing larger moves both up and down intraday. The two biggest headwinds impacting the market are the same as they have been – inflation and the war on Ukraine. The tailwinds continue to be a strong and resilient economy, in spite of the aforementioned challenges. Adding to the tailwinds is another (expectedly) strong earnings season. Even though earnings season has 'unofficially' already begun, it 'officially' kicks off tomorrow (Wednesday, 4/20), when Alcoa reports after the close. We'll get a total of 317 companies reporting this week. Another 1,019 next week. And 1,822 the week after that. In other news, the Housing Market Index slipped to 77 vs. last month's 79 and views for 78. Crude oil was up with both Brent and West Texas above $100 a barrel ($112 and $107 respectively). And the 10-year Treasury yield was up 0.0340 at 2.8620. Yields have risen sharply higher in the last few weeks in anticipation of the Fed's expected 50 basis point rate hike at their next meeting on May 3-4. That would put the Fed Funds rate at a midpoint of 0.875%. The Fed has said they expect rates to hit 1.9% by year's end. And with higher rates expected to combat inflation, while not hurting the economy (although slowing it down a bit as it wrings some of the excesses out of it), the Fed has said they expect the economy to "flourish in the face of less accommodative monetary policy." In the meantime, earnings season will take center stage over the next few weeks. But inflation and the war on Ukraine can just as easily move the market during this time if any headlines come out that warrant it. But since stocks typically go up during earnings season, odds are that we could be in for at least a few good weeks. See you tomorrow, Kevin Matras Executive Vice President, Zacks Investment Research |
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