After learning that April inflation was 4.9% down one-tenth of one percent the indexes finished mixed in a choppy whipsawing session.  Bonds yields slightly pulled back even as the regional banking sector experienced some renewed selling pressure and debit ceiling rhetoric swirled keeping investors on edge.  Today it’s all about the Jobless claim numbers and the April PPI with the number of earnings events starting to decline.  Although with select tech giant’s names rising the QQQ continued its bullish trend as the DIA, SPY, and IWM remained rangebound where they have traded for more than a month. 

Asian markets finished the day mixed but mostly lower with modest gains and losses.  European markets show modest gains this morning with the BOE raising rates by 25 basis points.  Ahead of market-moving economic data U.S. futures suggest a flat open however that is likely to quickly change as the data is reviled.  Plan for another challenging day of price action.

Economic Calendar

Earnings Calendar

Notable reports for Thursday include AQN, CRSP, CYBR, DDS, ENTG, FVRR, HIMX, JD, DNUT, MLCO, NWSA, NIO, PKI, TPR, USFD, UTZ, & YETI.

News & Technicals’

According to Jeffrey Kleintop, chief global investment strategist at Charles Schwab, the labor market may experience a reversal later in 2023, similar to how supply chain shortages turned into gluts of goods and materials in mid-2022.  However, some analysts argue that monetary policy may take longer to influence the labor market, especially in the services sector, where labor demand is high and labor supply is constrained by factors such as pandemic-related disruptions, demographic changes, and skill mismatches. Moreover, a contraction in labor supply may reduce labor productivity and variety, which could put upward pressure on wage growth and inflation. Therefore, meaningful policy action to grow the size and productivity of the labor force is needed to address the underlying causes of inflation and ensure a balanced and sustainable economic recovery.

The media and entertainment industry is facing a dilemma as it tries to balance raising prices and cutting costs amid a slowdown in subscriber growth and a shift in consumer preferences. Disney, for example, lost 4 million Disney+ subscribers in the quarter, most of which came from India. To find a new growth narrative, the industry may need to look at gaming, which is on track to be the primary source of entertainment across the world. Gaming not only reaches three billion people on the planet and drives multi-billion-dollar revenue streams, but also creates a sense of community and social interaction among its users. Gaming also offers opportunities for innovation and diversification, such as cloud gaming, virtual reality, augmented reality, and interactive storytelling. Therefore, media and entertainment companies may need to develop strong visions that span video, social media, and gaming sectors to create a richer and more engaging ecosystem for consumers.

On Wednesday, the indexes finished mixed with regional bank and debit ceiling issues worrying investors. This happened as April’s U.S. inflation rate was 4.9% higher than a year ago, a bit lower than the expected 5.0%, but still much higher than the Fed’s goal of 2.0%. Unfortunately, the DIA, SPY, and IWM remain stuck in the same wide trading range they have been stuck in for more than a month.  However, the QQQ managed a marginal break of overhead resistance with the tech giants doing all of the work. With the number of earnings events declining for 2^nd quarter earnings the focus this morning will be the Jobless Claims and the April PPI report with a little fed speak tossed in for good measure.  Plan for the challenging price action to continue!

Trade Wisely,

Doug