2023 | May 8

The Market

Stocks Flat

The S&P 500 and the Dow posted modest declines that were roughly equal in scale to the previous week’s gains, while the NASDAQ was essentially flat. Although stocks made sizable daily movements in the latest week, they’ve traded in a relatively narrow range since early April.

Although overall U.S. stock market volatility remained modest throughout the week, that wasn’t the case for the stocks of regional banks. A handful saw their stocks plunge by as much as 50% on Thursday, only to recover most of that ground on Friday as their shares rallied. In the wake of recent bank failures, regional banks’ balance sheets have come under intense scrutiny.

U.S. labor market performance continued to surprise on the upside, as the 253,000 jobs added in April exceeded expectations and topped the previous month’s downwardly revised figure of 165,000. The unemployment rate slipped to 3.4%, the lowest level since 1969.

For its tenth meeting in a row, the U.S. Federal Reserve lifted its benchmark interest rate, but it hinted at the possibility of a pause in its rate-hiking cycle. As it raised its benchmark rate to a range of 5.00% to 5.25%, the Fed’s latest policy statement removed language that had been in previous statements indicating that it “anticipates that some additional policy firming may be appropriate.”

With roughly 85% of S&P 500 companies having reported first-quarter results as of Friday, key metrics this earnings season have come in better than their one-year averages, according to FactSet. In addition, the research firm reports that the overall earnings outlook for full-year 2023 has improved in recent weeks.

Pressure grew on Congress and the White House to negotiate to avoid a potential default as the treasury secretary said that the government’s capacity to use special accounting measures to keep paying bills may be exhausted by June 1, several weeks earlier than had previously been expected. The president invited congressional leaders to meet with him on May 9 to discuss potential deals to lift the debt ceiling.

The day after the U.S. Federal Reserve lifted interest rates again, the European Central Bank followed suit but signaled that it isn’t yet ready to pause its inflation-fighting campaign. The bank increased its benchmark rate by a quarter percentage point to 3.25%—the highest in nearly 15 years.

A Consumer Price Index report scheduled to be released on Wednesday will show whether the recent moderation in inflation extended into April. In March, inflation fell to a 5.0% annual rate from 6.0% the previous month, bringing inflation to the lowest level in nearly two years. 

Source: John Hancock Investment Management

Property Tax Freeze

Travel is Back!

After three years of COVID-19 lockdowns, airline staffing shortages, last-minute flight cancellations and high car rental costs, Americans are returning to the roadways and airways this year. An AARP survey found that 62% of Americans, ages 50 and older, plan to take at least one trip this year and some plan to take three or four.

It’s a boon to the travel industry as Americans are expected to spend more on travel in 2023 than they did before the pandemic, according to a source cited by Becky Pokora of Forbes. In April, the U.S. Travel Association reported that spending is up 4%, although it may be leveling out as spending on airfares and hotels retreated a bit in April.

Americans plan to spend about $6,600 on travel this year, and many are cost conscious and wary of inflation, according to the AARP. Nevertheless, most people aren’t putting their vacation plans on hold. In fact, with the strong U.S. dollar working in Americans’ favor, heading overseas just might be the way savvy travelers can get the most for their money. The dollar and euro have been nearly equal in value, and currency exchange rates are making a host of other countries – across the Americas, Asia and Europe – attractive destinations.

Where does the U.S. dollar go the farthest? According to Quincy Williamson of Kiplinger:

• In Europe, the answer may be Greece and Portugal.
• In the Americas, look to Mexico, Costa Rica, Peru, Argentina and Chile.  
• In Asia, Japan, Thailand and Vietnam are the most affordable countries to visit.

While traveling abroad may be attractive from a financial point of view, the AARP survey found that just 40% of survey respondents plan to head overseas this year. That could prove to be a benefit if popular destinations are less crowded. Whether you prefer cities, beaches or rainforests, international travel could be just the ticket this year.

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eMoney

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Advyzon

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