Earnings Help Push Equities Higher

Markets moved higher for the 3rd consecutive week.

With 85% of S&P 500 companies having reported 1st quarter earnings results, 78% have beaten estimated earnings, which is above the 5-year average of 77% and above the 10-year average of 74%. Stocks have performed well in 2024 due to higher earnings and that is being driven by the consumer. Redbook Sales on a year-over-year basis were up 6% last week, the highest weekly increase in over 3 months. As such, the Atlanta Fed has increased their projection of 2nd quarter GDP to +4.2%, due in large part to a strong U.S. consumer. We’ll find out just how strong the consumer remains with the release of April’s Retail Sales figures.

The Initial Jobless Claims number increased more than expected last week, but the market largely took that in stride.

It will be worth watching to see if claims increased become a trend. The inflation data this week will be the primary data point investors will be watching as April’s data is expected to be flat. The Cleveland Fed's NowCast of inflation shows a tame April number and a potential cooling in May. A big miss to the upside for inflation this week would cause markets to doubt future rate hikes. Fed Chairman Powell speaks on Tuesday, which will keep things interesting.

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