2023 | April 24

The Markets

Stocks Flat

The major U.S. stock indexes traded in a narrow range for the third week in a row and the S&P 500, the NASDAQ, and the Dow each finished with a fractional decline. Since the start of April, the gap between the S&P 500’s highest daily closing level and its lowest close has been a mere 1.6%.

After the second week of earnings season, the proportion of S&P 500 companies that had beaten analysts’ quarterly net income expectations stood at 76% as of Friday, according to FactSet. That so-called beat rate ranks slightly below the 77% five-year average. Across sectors, consumer discretionary and industrials stocks are expected to report the strongest earnings growth overall.

The price of U.S. crude oil fell more than 5% for the week to less than $78 per barrel. The decline marked a reversal from recent weeks’ gains and left oil prices around their levels of a month earlier, when an announcement of production cuts by Saudi Arabia and other countries sent prices higher.

For the first time in 11 years, prices of existing U.S. homes have fallen for two months in a row. The National Association of Realtors said that the median existing home sale price in March fell 0.9% from a year earlier to $375,000. 

The latest round of partisan brinkmanship in Washington, D.C., over the nation’s debt ceiling fueled anxiety for investors. House Republicans on Wednesday introduced a bill that would cut federal spending in exchange for lifting the ceiling for one year. Meanwhile, the government continued to take special accounting measures to meet debt obligations and prevent a potential default.  

After eclipsing $30,000 the previous week, the price of Bitcoin dropped to nearly $27,000 on Friday. Despite the latest week’s roughly 10% decline, the most widely traded cryptocurrency remained well above a recent low of just under $20,000.

China’s government reported that the nation’s GDP grew at an annual rate of 4.5% in this year’s first quarter, as the recent removal of the country’s zero-COVID policies helped stimulate growth. In contrast, China’s growth figure for 2022 was 3.0%, short of the government’s target of around 5.5%.

The U.S. government on Thursday is scheduled to release its initial estimate of first-quarter economic growth, with most economists expecting that GDP expanded at an annual rate of around 2.0%. That would mark a modest slowdown from the fourth quarter of last year, when GDP growth was 2.6%.

Source: John Hancock Investment Management

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Power Outage? There's a Hybrid for That.

In recent years, storms have led to lengthy power outages in many parts of the United States. When ice storms knocked out the Texas power grid in the winter of 2021, some people relied on generators to supply their energy needs. Others turned to hybrid trucks, reported Paul Eisenstein of NBC News.

One hybrid truck owner in Texas purchased the optional generator feature, thinking he would use it when camping or to fire up power tools in remote areas. Instead, after the storm hit, he hooked the vehicle up to his house. For three days, it “provided enough energy to handle a refrigerator, a freezer, lights, the cable and internet box and a television.”

When the supply of generators ran low, one U.S. truck manufacturer asked its Texas dealerships to lend any hybrid trucks they had in stock to people who needed power.

Hybrid trucks that double as generators is just one example of innovation in the auto industry.

“The $4 trillion automotive industry is going through three big transformational changes at once. Two of those – the rise of electric vehicles and the gradual emergence of autonomous driving – have attracted most of the attention. But the third one could be more powerful still: Cars are becoming computers on wheels,” explained Eric Savitz of Barron’s.

There are more lines of code in automobiles than there are in jumbo jets, according to a C-suite executive at a semiconductor firm who was cited by Barron’s. In fact, automakers have been scooping up workers laid off by technology companies to help develop branded software.

Not too far in the future, it’s possible that drivers will be loyal to vehicle brands in the way they are to mobile phone brands. When drivers change brands, they’ll have to learn a new system – and that could give industry leaders a competitive advantage.

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