Weekly Digest 5/27/22
Happy Friday, May 27!
Hope you all had a great Week 9. Please find below our SWS-curated round-up of interesting articles, resources, information, and opportunities related to real-world finance that may be useful to you!
The Dow, S&P 500, and Nasdaq broke an eight-week losing streak as stocks rose across the economy. The reopening in Shanghai and China policy support, M&A, a much lower bar for retailers, declining Treasury yields, and a strong household balance sheet was in focus. Moreover, according to Bloomberg, global equities attracted ~20B in the week to May 25 – the most in 10 weeks.
Despite this, sentiment is still down. The Goldman Sachs Sentiment Indicator was below -2.0 for a fifth-straight week, the first five-week streak since 2011.
S&P 500 Sector Performance:
Outperformers: Consumer Disc. +9.24%, Energy +8.09%, Tech +8.07%, Financials +8.05%
Underperformers: Healthcare +3.21%, Telecom +3.59%, Utilities +5.00%, REITs +5.79%, Materials +5.93%, Consumer Spls. +6.15%, Industrials +6.33%
The tail end of the earnings session has put retailers into the consumer backdrop. Some of the week's well-received retail earnings included DG +21.7%, DLTR +29.0%, ULTA +23.9%, BBY +16.1%, WSM +21.0%, RL +6.0%, M +29.1%, JWN +25.4%, FTCH +23.8%. Reports with more cautious takeaways included COST +13.1%, BURL +13.9%, DKS +9.3%, GPS +6.1%, AEO -1.7%, ANF -19.4%, and BIG -2.2%. Reuters highlighted spending differences between higher- and lower-income consumers.
This week saw more press around how the Fed’s rate hikes and the start of quantitative tightening (QT) have already started cooling the economy and dampening inflationary pressure. Friday's April PCE data on inflation showed a third-straight month of core PCE growth of 0.3% m/m, while the headline fell from 0.9% in March to 0.2%.
SNAP -33.0% said this week that Q2 revenue and EBITDA would come in below guidance, due to the macro environment deteriorating faster and further than anticipated.
MSFT +8.2% will slow hiring in its Windows, Office, and Teams groups, with management citing the need to realign resources and priorities for the new fiscal year, according to Bloomberg.
Have a great weekend!
Cheers,
SWS Investment Committee