Stock Market Today: May 2nd - 6th, 2022

Welcome StonkForums to the trading week of May 2nd!

This past week saw the following moves in the S&P:


S&P Sectors End of Week:


Major Indices End of Week:



Major Futures Markets on Friday:


Economic Calendar for the Week Ahead:


What to Watch in the Week Ahead:

• Monday, May 2

Earnings: Moody’s, Nutrien, NXP Semiconductors N.V., Williams Companies, Devon Energy, Global Payments, Arista Networks, Expedia, Mosaic, ON Semiconductors, Diamondback Energy, Clorox, MGM Resorts International, Avis Budget

9:45 am. Markit Manufacturing PMI

10:00 a.m. Construction spending, ISM Manufacturing

• Tuesday, May 3

Earnings: Pfizer, Estee Lauder, Advanced Micro Devices, S&P Global, BP, Airbnb, Starbucks, Illinois Tool Works, AIG, Marathon Petroleum, Hilton, Biogen, Match Group, Paramount Global, Restaurant Brands, Lyft

10:00 a.m. Durable orders, Factory orders, JOLTS

• Wednesday, May 4

Earnings: CVS Health, Booking Holdings, Regeneron, Uber, Marriott, Moderna, Pioneer Natural Resources, Fortinet, Ferrari, Yum Brands

8:30 a.m. Trade balance

9:45 a.m. Markit Services and Composite PMI

10:00 a.m. ISM Non Manufacturing

2:00 p.m. FOMC statement release

2:30 p.m. Jerome Powell press conference

• Thursday, May 5

Earnings: Royal Dutch Shell, ConocoPhillips, Anheuser-Busch, Zoetis, Becton Dickinson, Vertex, Dominion, Block, Shopify, Illumina, Monster Beverage, MercadoLibre

8:30 a.m. Jobless claims, Labor market productivity and unit costs

• Friday, May 6

Earnings: Cigna, Icahn Enterprises, Formula One Group, NRG Energy, DraftKings

8:30 a.m. Nonfarm payrolls report

 

Nasdaq Collapses To Worst Month Since Lehman As Market Starts Pricing 75bps Hike In June
Remember how great the second half of march was!? Well that de-escalated quickly...


A 50bps hike is now a done-deal for next week's FOMC meeting and STIRs are now pricing a near 50% chance of a 75bps hike in June (not helped by a record surge in the Employment Cost Index this morning)!!



Source: Bloomberg

That would be The Fed's first 75bps hike since 1994!

And no, US equity markets are not "pricing in" that level of hawkishness... yet...



Source: Bloomberg

After starting the month with a panic-bid, Nasdaq ended April down almost 13%, its worst month since Oct 2008...



Source: Bloomberg

On the week, Small Caps were the worst (closely followed by Nasdaq) and that followed the puke last Friday...



And there was no signs of any rebalancing today as stocks were monkeyhammered lowered from just after the cash open (no thanks to AAPl and AMZN)and were utterly destroyed into the close... These were massive single-day moves



The S&P's 3.6% puke is the worst day since June 2020 (as AMZN plunged 14% - its worst day since July 2006)

The Dow fell 1000 points today - erasing all of the second-half of March melt-up gains...



Overall, Nasdaq and Small Caps are now down over 22% from their highs, S&P down almost 13% and The Dow down just less than 10% from its record highs...



Source: Bloomberg

It appears ARKK is following the path of the rise and fall of 2000's DotCom bust to the tick...



Source: Bloomberg

FANG stocks have lost over $1.6 trillion in market capitalization since their peak over $5 trillion in Nov 2021...



Source: Bloomberg

Staples were the only sector to end the month green with Tech and Discretionary puking over 10% and Financials almost as bad...



Source: Bloomberg

VIX reversed all the late-March compression, spiking up to 33



It wasn't just stocks that were clubbed like a baby seal in April, Bonds were a bloodbath with 10Y Yields soaring a stunning 54bps...



Source: Bloomberg

The yield curve steepened on the month but we note that 3s10s dipped back into inversion today...



Source: Bloomberg

The dollar index (DXY) exploded higher in April - up almost 5% against its fiat peers (its biggest monthly jump since Jan 2015) - trading at its highest in 20 years...



Source: Bloomberg

The Yuan saw its biggest monthly drop against the dollar since Jan 1994...



Source: Bloomberg

April was the Ruble's best month on record (going back to 1993)... so not "rubble" then?



Source: Bloomberg

Cryptos had a very rough month with Bitcoin & Ethereum down around 15% in April...



Source: Bloomberg



Gold was pretty much flat on the month while copper collapsed (along with silver). Oil was higher on the month, albeit amid a headline-driven roller-coaster of swings...



Source: Bloomberg

Gold ended April back above $1900... barely...



Retail gas prices were down on the month but have been rising for the last two weeks or so and look set to extend their gains, erasing any benefits from Biden's SPR plan...



Source: Bloomberg

Finally, it is worth noting that global bond and stock markets are down almost $25 trillion since the peak in Nov 2021...



Source: Bloomberg

And April was the worst month for a Bond/Stock portfolio since Feb 2009...



Source: Bloomberg

How much more pain will Powell allow the market to take?

 

Here are the percentage changes for the major indices for WTD, MTD, QTD & YTD in 2022-



S&P sectors for the past week-

 

6 Charts Focused on the Long Term

Friday, April 29, 2922

With the S&P 500 Index in correction territory (down more than 10% from the previous peak) while the market faces a number of big threats, including inflation, a hawkish Federal Reserve, soaring yields, and war in Eastern Europe, investor anxiety levels are understandably elevated. During volatile markets, it’s difficult to focus on anything beyond the short term, but at times like this studying market history for reminders of the benefits of long-term investing can be helpful for investors

“Individual investors have the benefit of time on their side,” wrote LPL Financial Equity Strategist Jeffrey Buchbinder. “History shows that patience is rewarded during volatile periods in the market. This looks like one of those times.”

Below are 6 charts we think may help investors stay focused on the long term.

First, simply put, stocks have gone up over time as shown in the chart below. Based on this 122-year data series of the Dow Jones Industrials, stocks have gained 9.5% annualized including dividends. That’s a pretty good long-term track record.



So what has driven those big gains for stocks all those years? Earnings, plain and simple. While we don’t have 122 years of earnings data for the Dow, we do have 70 years of S&P 500 earnings per share data, shown in the chart below. Earnings have grown at an annualized pace of 7.5% over this time period, consistent with long-term stock price appreciation (excluding dividends).



The next chart shows how punitive it can be to be out of the market on its best days. Though the S&P 500 Index is unmanaged and can’t be owned directly, it’s clear that owning stocks for the long run has been very rewarding and moving in and out and potentially missing out on gains can be costly. Stocks experienced some significant downdrafts during the 31-year period shown in the chart (2000-2002 and 2008-2009 to be specific) and yet the S&P 500 Index still rose an average of 9.9% per year during that time.



The next chart shows the probability of S&P 500 Index gains over various rolling time periods since 1950. Based on monthly data, the index was higher in more than 80% of all rolling 3-year and 5-year periods. Going out further, 92% of all 10-year rolling periods saw the S&P 500 move higher, while the S&P 500 was higher 100% of the time for all rolling 15-year periods. In other words, those with a greater than a 10-year investing time horizon have an excellent chance to achieve positive returns.



It’s also important for investors to remember that when stocks fall, they usually become cheaper relative to earnings. LPL Research certainly believes this is relevant today given the solid earnings trends still in place (despite several high profile disappointments among mega-cap tech and internet stocks this quarter).

The next chart illustrates the relationship between stock valuations—measured by the S&P 500 price-to-earnings ratio (P/E)—and future stock performance. Specifically, the chart shows the future 10-year returns an investor might expect based on the valuation levels at a given point in time. If this relationship holds going forward, then buying stocks at a 19 P/E today positions investors for better long-term returns—perhaps 5-6% annually—than the 24 P/E observed at the start of the year. Note that the P/E scale on the chart’s right axis is inverted, so a rising line reflects lower valuations.



Earlier this week LPL Financial Chief Market Strategist Ryan Detrick published a chart (shown here) showing the average maximum peak-to-trough decline in a given year has been 14%. Put another way, as shown in the chart below, on average the S&P 500 has experienced one 10% or greater correction per year. The takeaway here is that the volatility experienced this year, with the S&P 500 falling 13% from January 3 through March 8, is actually quite normal.



So there you have it. Six charts to help put the latest bout of volatility in perspective and remind us of the benefits of long-term investing. Bottom line, be patient, stick to your plan, and if you have a long-term time horizon with a relatively conservative asset allocation, this might not be a bad time to consider adding some equities.

A Closer Look At The Stock Market Sell Off

Wednesday, April 27, 2022

The selloff continued on Tuesday, with the S&P 500 Index down 7.8% in the usually bullish month of April. With three days to go, this could go down as the worst April since a 9.0% drop in 1970.

The usual suspects of a slowing economy, a hawkish Federal Reserve Bank (Fed), supply chain worries, war in Europe, and now another China shutdown have all combined to make this one of the worst starts to a year ever for both stocks and bonds.

It is important to remember, though, that historically midterm years can be rough, down more than 17% on average peak-to-trough. The March 8 closing low, which amounted to a 13% correction, is still the low for the year as of now. The good news is a year off those lows stocks have historically gained more than 32% on average.



One potential worry is in midterm years stocks usually bottom later in the year. “Could stocks bottom for the year in March or April? Sure, but history would say midterm year lows tend to be later in the year,” explained LPL Financial Chief Market Strategist Ryan Detrick. “You’d have to chalk this up as one clear potential worry out there still.”

As shown in the LPL Chart of the Day, midterm years see the S&P 500 bottom on August 14 on average, and the median bottom is in early September. But the good news that is important for investors to remember is big gains a year off those lows have been quite common.



Something else to remember is just how strong the bull market was off the March 2020 lows. As you can see below, this is still the second best start to a bull market ever. After the fastest bull market to double in history, some type of potential weakness or consolidation shouldn’t be overly surprising.



Many investors forget that double-digit declines during a year are actually normal. After only one 5% pullback all of last year, markets have provided an unfriendly reminder in 2022. In fact, since 1980, the average correction each year is 14.0%, putting this year’s 13.0% correction in perspective. Taking this a step further, 21 times since 1980 the S&P 500 has been down double digits at one point from its peak, with an impressive 12 of those years managing to come back and finish the year positive. In fact, the average yearly gain those 12 years was a very solid 17.0%.



Lastly, we knew coming into this year that more volatility was possible, potentially early in the year as that’s been the playbook during midterm years. Looking at the entire four-year Presidential cycle shows that this quarter is actually the worst out of 16. Last quarter (year 2, quarter 1) and next quarter (year 2, quarter 3) are pretty weak as well. The good news is some stronger quarters are right around the corner.



The weakness we’ve seen so far this year has been disappointing and taken many investors by surprise. But after more than a 100% rally off the March 2020 lows, some type of usual midterm year frustration was likely. Continue to follow LPL Research, as we help you navigate the investments landscape.

S&P 500 Down Year-to-Date and Down in April Preceded Year Loss 69.2% of the Time

With just two trading days remaining, April will not likely live up to its historically bullish reputation this year. S&P 500 decline in April as of today is 7.65%, second worst April since 1950 and sixth worst since 1930. As of today’s close, the third from last trading day of April, S&P 500 year-to-date loss of 12.22% is second worse in our data going back to 1930. The worst year was 1970. Since 1950 the combination of a down S&P 500 April combined with a year-to-date loss has been a clearly bearish indicator. Of the previous 13 occasions since 1950, the following May was positive five times with an average loss of 0.39% and the full year finished positive four times. The only full-year double digit gain was way back in 1952. The average loss in all years was 7.26%.

Welcome To the Weak Spot of the 4-Year Cycle

Unfortunately, the market entered the weak spot of the 4-Year Election Cycle this month with an array of headwinds from the Fed, Inflation, the Ukraine War and now most concerning the China’s unprecedented Covid lockdowns and testing. This situation has the potential to generate the greatest impact on the global economy as it could severely restrict the flow of essential raw materials and goods around the world.

The market is also suffering from the usual disappointments, unmet promises and miscues from the new incumbent administration that has historically restricted market gains through Q2-Q3 of the midterm election – the period we’ve only just begun. As you can see in the chart here Q2-Q3 are the weakest two quarters of the 4-Year Cycle, averaging losses of -1.2% for DJIA and -1.5% for S&P 500 since 1949, and -5.0% for NASDAQ since 1971.

The good news is that this weak spot immediately proceeds the “Sweet Spot” of the 4-Year Cycle, which runs from Q4 of the Midterm Year through Q2 of the Pre-Election Year, averaging gains of 19.3% for DJIA and 20.0% for S&P 500 since 1949, and 29.3% for NASDAQ since 1971.

Caution is definitely in order over the next “Worst Six Months.” We already issued our Seasonal Best Six Months MACD Sell Signal on April 7. But be ready to pounce on the perennial Midterm year bottom that is most likely to hit sometime over the next six months.

May is Second Worst S&P 500 Month in Midterm Election Years

May has been a tricky month over the years, a well-deserved reputation following the May 6, 2010 “flash crash”. It used to be part of what we once called the “May/June disaster area.” From 1965 to 1984 the S&P 500 was down during May fifteen out of twenty times. Then from 1985 through 1997 May was the best month, gaining ground every single year (13 straight gains) on the S&P, up 3.3% on average with the DJIA falling once and two NASDAQ losses.

In the years since 1997, May’s performance has been erratic; DJIA up thirteen times in the past twenty-four years (four of the years had gains in excess of 4%). NASDAQ suffered five May losses in a row from 1998-2001, down –11.9% in 2000, followed by thirteen sizable gains in excess of 2.5% and six losses, the worst of which was 8.3% in 2010 followed by another sizable loss of 7.9% in 2019.

Since 1950, midterm-year Mays rank poorly, #10 DJIA, #11 S&P 500, #8 NASDAQ, #6 Russell 1000 and #9 Russell 2000. Performance ranges from a best of +0.1% by Russell 1000 to a worst of –1.1% for Russell 2000. Not one of these indexes has been positive more than 50% of the time in midterm years.

 

Here are the current major indices pullback/correction levels from ATHs as of week ending 4.29.22-


Here is also the pullback/correction levels from current prices-


Here are the current major indices rally levels from correction low as of week ending 4.29.22-

 

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Here are the upcoming IPO's for this week-

 

Stock Market Analysis Video for April 29th, 2022

 

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Here are the most anticipated Earnings Releases for this upcoming trading week ahead.

***Check mark next to the stock symbols denotes confirmed earnings release date & time***

Monday 5.2.22 Before Market Open:

Spoiler: CLICK HERE TO VIEW MONDAY'S AM EARNINGS TIMES & ESTIMATES!

Monday 5.2.22 After Market Close:

Spoiler: CLICK HERE TO VIEW MONDAY'S PM EARNINGS TIMES & ESTIMATES!

Tuesday 5.3.22 Before Market Open:

Spoiler: CLICK HERE TO VIEW TUESDAY'S AM EARNINGS TIMES & ESTIMATES!

Tuesday 5.3.22 After Market Close:

Spoiler: CLICK HERE TO VIEW TUESDAY'S PM EARNINGS TIMES & ESTIMATES!

Wednesday 5.4.22 Before Market Open:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S AM EARNINGS TIMES & ESTIMATES!

Wednesday 5.4.22 After Market Close:

Spoiler: CLICK HERE TO VIEW WEDNESDAY'S PM EARNINGS TIMES & ESTIMATES!

Thursday 5.5.22 Before Market Open:

Spoiler: CLICK HERE TO VIEW THURSDAY'S AM EARNINGS TIMES & ESTIMATES!

Thursday 5.5.22 After Market Close:

Spoiler: CLICK HERE TO VIEW THURSDAY'S PM EARNINGS TIMES & ESTIMATES!

Friday 5.6.22 Before Market Open:

Spoiler: CLICK HERE TO VIEW FRIDAY'S AM EARNINGS TIMES & ESTIMATES!

Friday 5.6.22 After Market Close:

Spoiler: CLICK HERE TO VIEW FRIDAY'S PM EARNINGS TIMES & ESTIMATES!

(NONE.)

 

StonkForumers! Come join us on our stock market competitions for this upcoming trading week ahead!-

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StonkForums Weekly Stock Picking Contest & SPX Sentiment Poll (5/2-5/6) <-- click there to cast your weekly market direction vote and stock picks for this coming week ahead!

Daily SPX Sentiment Poll for Monday (5/2) <-- click there to cast your daily market direction vote for this coming Monday ahead!

StonkForums May 2022 Monthly Stock Picking Contest & SPX Sentiment Poll <-- click there to cast your monthly market direction vote and stock picks for the month of May!

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It would be pretty sweet to see some of you join us and participate on these!

I hope you all have a fantastic weekend ahead!

 

And finally here is the most anticipated earnings calendar for this upcoming trading week ahead-
($AMD $SHOP $PFE $SQ $ON $BRK.B $DKNG $DVN $MOS $MRO $ABNB $MRNA $EPD $UBER $BP $FUBO $LCID $SIX $CVS $SBUX $ETSY $TWLO $GOLD $CROX $ET $MARA $GPN $AMG $MPC $PENN $NET $CAR $XPE $NTR $NXPI $DDOG $BKCC $OPEN $COP $MGM $FANG $MELI)


If you guys want to view the full earnings post please see this thread here-

• Most Anticipated Earnings Releases for the week beginning May 2nd, 2022 <-- click there to view

 

Historic End to a Down Month
Sat, Apr 30, 2022

It was a rough finish to the month of April. Not only did the S&P 500 (SPY) finish the month with an 8.78% decline month to date, the biggest one-month decline since March 2020, but the last trading day of the month was one for the record books. Since SPY began trading in 1993, the only bigger drop on the final trading day of the month was in August 1998. Back then it was a much larger 7.13% decline.



In the table below, we show all months since 1993 that SPY declined at least 2% on the last trading day of a month. Behind April, the next worst final day of a month and the only other month with an over 3% decline was September 1998, but back then, SPY had still managed to finish up MTD. Finishing up MTD has been the exception rather than the rule of these occurrences, though, as November 1998 and October 2011 were the only other times that SPY fell over 2% on the last trading day of the month but still finished with a MTD gain.

As for where the S&P 500 has typically gone from there, the first trading day of the new month has only seen a move higher 46% of the time as the index has averaged a 30 bps decline. For the full month, though, performance is generally more positive with an average gain of 2.75% and positive returns almost 70% of the time.

 

Top of the morning StonkForumers! Happy Monday to all of you! And welcome to the new trading week and month of May and a frrrrrrrrrrrrrrrrrrrrrrresh start! Here is a quick check on those futures as we are a little under 4 hours from the cash market open.

GLTA on this Monday, May the 2nd, 2022!

 

Good Monday morning StonkForumers!

Here is this morning's pre-market news thread for those of you wanting to get a quick read before today's open-
<-- click there to read!

Hope everyone has a great trading day and week and month ahead.

 

Morning Lineup - 5/2/22 - New Month, Same Market
Mon, May 2, 2022

Futures were modestly positive for most of the overnight session but have weakened as we get closer to the opening bell. After a day like last Friday, it's all but guaranteed that we're likely to see continued volatility today. As they say around the roulette wheel, "Round and round it goes. Where it stops nobody knows."

Economic data at 10 AM will also be a big factor in where the market trades today, but the looming Fed meeting mid-week will be on everyone's mind. While the current rate hiking cycle has already been called the most aggressive in a generation, it's important to remember that the Fed has only hiked 25 bps so far. That will change this week as a hike of at least 50 bps is pretty much fully priced in. The most ironic aspect of it all, though, is that after months of delay, the Fed is starting to ramp up the pace of hikes just after a negative Q1 US GDP print, slower than expected economic data, and even weaker data in China and Europe.

In today's Morning Lineup, we recap overnight events in Asia and Europe (pg 4), economic data in China and Europe (pg 5), as well as a recap of PMI data for April (pg 6).

It's often said that the stock market is one of the only places where investors don't like bargains. In other words, when the market is rallying investors love stocks, but when it declines, investors can't get out fast enough. Warren Buffett is one investor who has bucked the conventional approach of many investors and consistently used weakness as an opportunity. His actions in Q1 were a perfect example. In this weekend's annual meeting, one slide that stood out was the breakdown of Berkshire Hathaway's equity purchases during the quarter. Of the nearly $52 billion in purchases made by Berkshire in Q1, just under 80% of it occurred during the highlighted period in the chart (from 2/21 through 3/15) when prices in the quarter were at their weakest.

It's also worth keeping in mind what Berkshire was buying during the quarter. It wasn't growth stocks that were down the most. Instead, it was mostly in stocks with reasonable valuations like Chevron (CVX). Occidental (OXY), Alleghany (Y), HP (HPQ), and even Apple (AAPL).

 

looks like the 10yr yield hit above of 3% today the first time in like 4 years i believe

ngl, but still looking for that true washout/capitulation day (kinda like one of the days we saw around the covid correction). but, this daily -2 and -3% moves lower could get us there too. market getting very oversold in a very near-term. nothing moves in straight lines in either direction forever

just a 100% gut feeling here, but maybe we'll see a sell on rumors, buy the fact with the fed announcement on wednesday

 

hah, so i had admittedly totally missed this last week (apologies!) have been really slow with the news/market action/etc lately due to IRL events, but am slowly but surely getting myself back gradually. still a long way to go

but, didn't realize that this is one of the worst starts to a year for the spx in nearly a century

gotta go back to 1939 to find an even worst start as this years per this chart below would illustrate

 

meanwhile, i forgot to mention this at friday's close. but april ended with its worst finish in about 50 years...but, get this...it just narrowly missed it from being the worst april in nearly a whole century