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Weekly Market Update for May 3, 2024

by Jim Ulland

As John Adams said, “Facts are stubborn things.” Since May 1st, the market has replaced feelings with facts. Large tech companies reported first quarter earnings, and they were good. Meta’s (Facebook’s) earnings were up over Q1 of 2023 by 114%. Alphabet’s (Google’s) were up 62%. Microsoft’s were up 20%. Amazon’s were up 216%. The prices of these stocks responded accordingly to these strong earnings reports (facts). Since the start of May, Meta’s stock was up 5%. Alphabet’s stock was up 3%. Amazon was up 6%. Microsoft was up 4%. Nvidia will report on 5/22/24. It seems that the much-anticipated pullback in the market was an April phenomenon. We expect additional pullbacks this year, but this one seems over for now.

Interest rates were buoyed by the good news of today’s net new jobs report. The narrative goes like this: new jobs created in April were less than expected. Unemployment rose. Wage increases were less than forecast. These facts suggest that lower inflation could come in May. Crude oil is also down from its recent high by 9%. This week the Fed said it needed lower inflation before it would cut interest rates. This week’s news speaks to that Fed concern. The resumption of a downward trend in inflation would be very beneficial to fixed income securities and our fixed income strategy Intelligent fixed Income (IFI), which currently pays about 7% in current yield.

For those still nervous about the market, US Treasuries pay an attractive return while you wait to get comfortable. The income from these securities is not taxed by the states, a big advantage for those in high tax states. Also, there is no early withdrawal penalty as many are painfully aware is inherent in CDs. There is a small amount of market risk to sell US Treasury securities before maturity, but this strategy minimizes such risk by using very short maturity Treasuries.

Other economic news from the week included a decline in consumer confidence. The ISM manufacturing index turned negative. Google announced layoffs. Several large companies announced stock buybacks. Apple’s buyback was for $110B!

For the week the NASDAQ was up +1.43% and the S&P 500 was +0.55%. Monday the S&P 500 was up +0.32%, Tuesday it was down -1.57%, Wednesday +0.91%, Thursday +0.95%, and Friday + 1.26%. The 6-month Treasury closed at 5.37%. The 10-Year Treasury was down -17bps at 4.50%. After a very busy week of economic news, next week will be light. The headlines may focus on large universities and how they handle the campus unrest. Of course, this is tied to the geopolitical tensions between Israel and Gaza, a problem which seems very difficult to resolve. More corporate earnings reports will give a view into Q2.

The information contained in this commentary is not investment advice for any person. It is presented only for informational purposes to assist in explaining factors that may have had an impact in the past or may have an impact in the future on client portfolios or composites. All expressions of opinion reflect the judgment of the firm on this date and are subject to change. Included information has been obtained from sources considered reliable, but we do not guarantee that the foregoing materials are accurate or complete. Investors should contact Ulland Investment Advisors for individualized information prior to deciding to participate in any portfolio or making any investment decision. Ulland Investment Advisors does not provide tax advice. All investors are strongly urged to consult with their tax advisors regarding any potential investment.

Performance quoted is past performance. Past performance is not indicative of future performance. There is always a possibility of loss. Current performance may be lower or higher than performance shown. Differences in performance versus the indices/funds may be attributable, in part, to differences in the asset make-up of the strategy vs. the indices/funds. Performance calculations are based on the reinvestment of dividends and gains unless these amounts were paid out to the client. Performance is subject to revision. See www.ullandinvestment.com for important strategy disclosures.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investing involves risk; principal loss is possible. Investors should consider the investment objectives, risk, charges, and expenses of the strategy carefully before investing. This and other important information can be obtained by contacting Ulland Investment Advisors.

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Ulland Investment Advisors

4550 IDS Center · Eighty South Eighth Street · Minneapolis MN 55402 · Telephone: 612-312-1400 · Facsimile: 612-204-3464