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Week in Review: Apr.17.2023 - Apr.21.2023

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April 24, 2023

Market Recap


The S&P 500 index slipped 0.1% this week despite many companies posting Q1 earnings beats, as some weaker-than-expected guidance and executives' warnings of expected challenges weighed on investor sentiment.

The market benchmark ended the week at 4,133.52, down from last Friday's closing level of 4,137.64. However, the index is still in positive territory for the month and year to date; it is now up 0.6% for April and up 7.7% for 2023.

The slight decline came as Q1 corporate earnings results for many companies have been coming in above analysts' mean estimates, but some guidance has been lackluster and executives have been signaling they are preparing for challenges ahead that could include a recession.

The downbeat commentary and guidance are being seen by investors as signs that inflation as well as the Federal Reserve's rate increases to tamp down on inflation are weighing on the economy. While investors are hoping the rate increases will help slow down inflation, they are fearful of slowdowns elsewhere in the economy.

The communication services sector had the largest percentage drop this week, down 3.1%, followed by a 2.5% decline in energy. Technology, materials and health care were also in the red.

However, consumer staples led to the upside, climbing 1.7%, followed by a 1.6% rise in real estate and a 1.1% increase in utilities. Financials, consumer discretionary and industrials also rose.

The decliners in communication services included shares of AT&T (T) which fell 8.6% this week. The telecommunications company reported mixed Q1 results, with adjusted earnings per share coming in slightly above analysts' mean estimate while revenue came in shy of the Street view.

The drop in the energy sector came as crude oil futures fell. Among the hardest-hit energy stocks, shares of Valero Energy (VLO) shed 9.3% while APA Corp. (APA) lost 8.7%.

Among the consumer staples sector's gainers, shares of Clorox (CLX) rose 4.4% as the consumer products company said it will cut about 200 jobs, or about 4% of its nonproduction staff, as part of its effort to streamline operations. In announcing the job cuts, Chief Executive Linda Rendle said the company is on track to generate ongoing annual savings of approximately $75 million to $100 million.

The real estate sector's gainers included shares of Prologis (PLD), which increased 3.2%. The logistics real estate company reported it expanded core funds from operations, or FFO, during Q1 on higher rents and occupancy. Prologis also raised the bottom end of its full-year FFO target on the assumption that rents will continue to rise as new supply slows.

Next week, earnings reports are expected from companies such as Coca-Cola (KO), Microsoft (MSFT), Google parent Alphabet (GOOG, GOOGL), Visa (V), Pepsico (PEP), McDonald's (MCD), Facebook parent Meta Platforms (META), Thermo Fisher Scientific (TMO), Boeing (BA), Amazon.com (AMZN), Mastercard (MA), Eli Lilly (LLY), Merck (MRK), Exxon Mobil (XOM) and Chevron (CVX).

Economic data will include reports such as March new home sales on Tuesday and March durable goods orders on Wednesday, but investors are likely to be most focused on Thursday's report of Q1 gross domestic product as well as Friday's release of the March personal consumption expenditure price index, a key inflation measure.

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