John Hancock: Weekly Markey Recap Week Ended April 22nd

Q1 GDP ahead

A report scheduled to be released on Thursday will show whether the U.S. economy’s strong late 2021 momentum carried over into early 2022. The government will release its initial estimate of first-quarter GDP growth. In the previous quarter, the economy expanded at an annual rate of 6.9%; for full-year 2021, the rate was 5.7% on an inflation-adjusted basis—the fastest growth since 1984.

Earnings surprises

With the earnings season now about 20% completed, the proportion of S&P 500 companies that had beaten analysts’ net income expectations stood at 79% as of Friday, according to FactSet. That so-called beat rate ranks slightly above the 77% five-year average. Across sectors, energy and materials stocks are expected to report the strongest earnings growth overall.

Half-point hike?

It’s looking increasingly likely that the U.S. Federal Reserve will accelerate the pace of its interest-rate increases, based on public comments Thursday from Jerome Powell. The Fed chair said the central bank is likely to raise its benchmark rate by a half percentage point at its meeting on May 4. It’s more typical for the Fed to raise rates by a quarter point at a time, as it did in its March meeting.

Yield surge

Concerns about inflation and the pace of interest-rate increases continued to weigh on prices of government bonds, sending yields to the highest levels in three and a half years. On Thursday, the yield of the 10-year U.S. Treasury bond briefly climbed as high as 2.95%; on Friday, it was trading around 2.90%.

Source: https://wmr.jhinvestments.com/