Read the highlights of this week’s commentary from Helios:
- The probability of a 25-basis-point increase next month was 82% as of April 21, 2023, according to the CME FedWatch Tool, suggesting futures traders have penciled in a hike although expectations can be volatile.
- Equity volatility could ramp up next week as big tech companies (Microsoft, Alphabet, and Amazon) report earnings, and a miss by any of the mega-caps could cause more stress on Wall Street. FactSet projected that average earnings per share for tech could fall 15.1%, due to several factors, including the strong dollar, sluggish demand for semiconductors, businesses cutting back on cloud computing, and waning personal computer sales following impressive gains during the pandemic.
- US business activity unexpectedly climbed to a nearly one-year high, with the S&P Global flash April composite Purchasing Managers Index rising to 53.5, indicating expansion and the potential for inflationary pressures.
- Oil prices and the S&P 500 have not been moving in lockstep since early March, with crude futures experiencing volatility while the SPX remains range bound.
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