Weekly Market Update

Equities advanced last week on optimism of a potential debt-ceiling agreement, leading to the S&P 500 Index returning just under 10% so far in 2023. Despite a near-double digit return from the S&P 500 Index, the S&P 500 Equal Weight Index has returned just 1.7% this year. Why the difference? This year's stock market performance has been primarily driven by a narrow segment of mega-cap tech companies, who most recently have benefited from the hype around artificial intelligence. The top ten companies in the S&P 500 Index, seven of which are tech companies, currently make up over 30% of the index. (Source: TDAmeritrade)

The disinflation trend continued for the 10th consecutive month in April as the Consumer Price Index (CPI) came in at 4.9%, down from 5.0% in March. While still above the Fed's 2% target inflation rate, the Fed is expected to pause their interest rate hikes after raising the fed funds target range between 5% and 5.25%, a 16-year high. With the pause, the Fed appears to be shifting their focus to the banking sector turmoil and the impact of tighter lending conditions on the economy. (Source: The Wall Street Journal)

The U.S. labor market added 253,000 jobs in April which brings the unemployment back down from 3.6% to 3.4%, matching the lowest reading since 1969. The stock market reacted favorably to the strong employment data, a potential shift in the "good news is bad news" narrative that has driven markets over the past year as the Federal Reserve fights persistent inflation. (Source: The Wall Street Journal)

Weekly Market Review Last week's release of the latest U.S. GDP report confirmed that the economy is losing momentum, with GDP slowing to 1.1% in the first quarter, compared with 2.6% in the prior quarter and 3.2% in the quarter before that. Within the GDP data was a bright spot from personal consumption, the primary driver of economic activity, which came in well above overall GDP growth at 3.7%. (Source: The Wall Street Journal)