A Muddled Consumer
This week saw a relatively light calendar for economic data releases. Among the more prominent releases were two related to the U.S. consumer and their current assessment of the economy. The first of these two releases, the University of Michigan’s Consumer Sentiment Index registered a reading of 69.1. This was markedly lower than the previous month’s result of 77.2 but higher than the consensus expectation of 67.4. In contrast to the University of Michigan’s survey result is the measure of consumer confidence released this week by the Conference Board which came in at 102.0. This reading was higher than both the consensus expectation of 95.8 and the prior month’s result of 97.5.
Some commonalities that were present in the results for both measures included concerns over the prospect of higher interest rates and ongoing inflation. The Michigan survey saw an uptick from 3.2% to 3.3% in the expectation for the rate of inflation over the next 12 months. One area where a difference was seen between the two measures pertained to the labor market. Results from the Conference Board saw an improvement in the survey’s labor market differential which compares responses stating jobs are plentiful versus those that say jobs are hard to get. While both declined for the month, the gap between them widened which reveals a more positive labor market outlook. In contrast, the Michigan survey revealed concerns about a prospective rise in the unemployment rate and slower income growth.
Growth Stocks Back to the Forefront
While broad market averages declined for the week growth stocks dominated their value-oriented counterparts. Overall, equities declined 1.3% as measured by the Russell 3000 Index of domestic equities. The Russell 3000 Growth Index however was able to finish virtually flat for the period with a return of 0.1%. In contrast, value stocks declined 3.0%. Small cap stocks also declined 3.0%.
On the fixed income front the return for bonds, like equities, was negative for the week as they returned a -1.0%. A move higher in interest rates precipitated the decline as the 10-year U.S. Treasury bond saw its yield rise from 4.42% to 4.61%.
Final First Quarter Earnings Update
With 96% of S&P 500 Index companies having reported FactSet Research estimates that year-over-year earnings growth for the quarter registered 6.0%. If this figure holds after the final four percent of index companies have reported it will be the strongest level of year-over-year growth since the first quarter of 2022.
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Sources: BTC Capital Management, Bloomberg, FactSet Research, FTSE Russell
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