Morning Reads
- Australia’s Trade Surplus Narrows as Households Defy High Rates
- China’s Climate Envoy Has an Economic Case to Make in Washington
- Biden Calls Ally Japan ‘Xenophobic’ Along With China, Russia
- Japan Likely Spent About $23 Billion in Latest Yen Intervention
- Powell Keeps Rate Cuts on Table But Leaves Timing Less Certain
- You Can’t Call Jerome Powell a Big Teaser
- What Will It Take for the Fed to Lower Rates?
- In Jamie Dimon’s America, the Stock Market Has Already Voted
- Wall Street Seizes Opportunity to Gut SEC Trading Surveillance
- The State of Crypto Is Anything But Strong
- Why Banks These Days Are So Excited About Being Boring
- Blackstone Taps Vast Source of Cash in $1 Trillion Credit Push
- NYSE-Parent ICE’s Profit Rises on Record Surge in Energy Market Volatility
- Strongest U.S. Challenge to Big Tech’s Power Nears Climax in Google Trial
- The Judge Deciding Google’s Fate
- Why Megacorporations Shouldn’t Overestimate Their Monopoly Power
- Musk’s Starlink Persists in Unauthorized Areas Despite Shutdown Warnings
- Huawei Secretly Backs US Research, Awarding Millions in Prizes
- Intel Bets $28 Billion Comeback on High=Tech US Chip Designs
- BYD’s First-Quarter Story Is in The Margins
- Apple’s Earnings Come With a Low Bar and Big Buyback Hopes
- Shell Beats Forecasts on Gas-Trading Resilience; Launches $3.5 Billion Buyback
- Moderna Posts Quarterly Sales Beat, Smaller Loss than Expected
- Novo Nordisk Hikes Guidance as Weight-Loss Drug Sales Surge. Why the Stock’s Falling
- Peloton CEO McCarthy to Step Down; Firm to Cut 15% of Workforce
- Xi Warns Blinken Against ‘Vicious Competition’ Between US, China
- Bank of Japan Holds Rates Steady, Expects Inflation to Stay Around 2%
- Yen Swings With Traders on High Alert for Intervention
- U.K. Consumers Get Spring in Step as Confidence Mounts
- Global Equity Funds Face Fourth Week of Outflows Amid Dampened Fed Rate Cut Hopes
- Investors Brace for 5% Treasury Yields as US Inflation Worries Mount
- With Inflation This High, Nobody Knows What a Dollar Is Worth
- Only Half of Global Rate Hikes Set to Be Taken Back by End-2025
- Billionaire Stephen Ross Believes in South Florida—and Is Spending Big to Transform It
- What Is a ‘Decent Wage’? France’s Michelin Raises a Debate
- ‘Net Neutrality’ Faces a Stiff Judicial Test
- Why Are Shares of Intel Stock Crashing After Earnings?
- A Chinese Firm Is America’s Favorite Drone Maker. Except in Washington
- Rosenbush’s Take: Rubrik IPO Reflects Increasingly Difficult Path Startups Face to Going Public
- Thoma Bravo to Buy U.K. AI Cybersecurity Company Darktrace for $5.3 Billion
- Air Conditioning and AI Are Demanding More of the World’s Power—Renewables Can’t Keep Up
- Apollo Global to Buy U.S. Silica in $1.85 Billion Deal
- Anglo Rejects BHP Takeover Bid as Significantly Undervalued
- Rising Copper Demand Spurs Search for Alternative Climate Solutions
- Bonjour, New York? French Oil CEO Sees a Climate Path Out of Paris
- Exxon, Chevron Fall After Disappointing First-Quarter Showings
- Railroad CEO Isn’t Ruthless Enough for Investors After Toxic Crash
- China to Pay Consumers Up to Nearly $1,400 to Replace Old Cars
- Regulators Probing Tesla Recall Tied to Autopilot
- Used-Car Sales Have Moved Online—Here’s Why Both Customers and Dealers Are Happy
- Americans Went All-In on Self-Storage. That Demand Is Suddenly Cooling
- The Long, Slow Death of Urban Nightlife
Options
PREMIUM
Prepper
There's a famous adage on Wall Street called "Sell in May and go away," but investors are analyzing if the strategy still holds any merit. The investment approach posits that stocks tend to underperform in the six months through October, so investors should convert to cash at the start of May and then buy into a dip later in the fall. The origins of the saying go back quite a while, with reasons ranging from vacation cycles to bonus allocations, and others noting that the worst market crashes of 1929 and Black Monday in 1987 occurred during this period.
Thought bubble: Many academic papers and market research have been written on the subject, with breakdowns by stock class or time periods. While seasonal patterns do exist, and equities could face some increased risk in the summer months, they still tend to go up over the long term despite additional volatility. Staying fully invested could prove safer than trying to time the market in any given year, and there are countless indicators out there for better portfolio decisions, such as earnings, valuations, and the direction of interest rates.
"The 'Sell in May and go away' adage has a weak track record over the past 40 years, with the S&P 500 having positive returns in over 75% of summer periods," writes Lawrence Fuller, Investing Group Leader of The Portfolio Architect. "The S&P 500 has historically finished the year higher when the first four months posted a gain, supporting a continuation of the bull market."
Unconvinced? If anything, bears have been pointing to the outsized market gains seen since late October and the latest top hit in late March. In only five months, the S&P 500 Index (SP500) soared nearly 28% to hit a peak of 5,264, before slumping 4% in April. Dip buyers may still be waiting for the too-far, too-fast rally to fizzle before inching back into the market, especially given a new period of inflation uncertainty, slowing consumer spending and GDP, and signs of waning risk appetite. (5 comments)
Lack of progress
Recent data showing higher-than-desired inflation means it will take more time for the Fed to gain confidence that price pressures are sustainably easing. That was the main message coming out of Jay Powell's FOMC presser on Wednesday, where he dismissed talk of stagflation after the central bank maintained its key interest rate at 5.25%-5.50% for the sixth consecutive meeting. The FOMC also decided to ease quantitative tightening by slowing the pace of its balance sheet runoff, pushing Treasury yields lower. "Powell adopted a more dovish tone," noted SA analyst Christopher Robb, but also "expressed confidence that long-term inflation expectations are anchored." (35 comments)
Industry heavyweight
It's hard to trade earnings. Shares of Novo Nordisk (NVO) fell more than 3% in premarket trading despite an outlook boost on the back of strong Q1 results. The performance was driven by increased demand for Novo's blockbuster GLP-1 weight-loss drugs Ozempic and Wegovy, which have taken the industry by storm and sent the stock flying. The Danish drugmaker still faces stiff competition in the weight-loss drug market from Eli Lilly (LLY), which has seen surging demand for its GLP-1s. Novo also warned of continued pricing pressures on its diabetes and obesity drugs, as well as supply constraints and shortages. (9 comments)
Big Oil gets bigger
M&A activity in the Permian Basin is progressing, with the FTC poised to approve Exxon Mobil's (XOM) $60B purchase of Pioneer Natural Resources (PXD) after the companies agreed to minor concessions. The approval is likely within days, but it will reportedly be conditioned on Pioneer founder and former CEO Scott Sheffield not joining Exxon’s board as planned. The all-stock deal was announced in October and would make Exxon the most dominant producer in the region. Pioneer is the Permian's largest operator at 9% of gross production, while Exxon is no. 5 at 6% of gross production. (14 comments)
Today's Markets
In Asia, Japan -0.1%. Hong Kong +2.5%. China -0.3%. India +0.2%.
In Europe, at midday, London +0.4%. Paris -0.7%. Frankfurt +0.1%.
Futures at 7:00, Dow +0.5%. S&P +0.7%. Nasdaq +0.9%. Crude +0.6% to $79.50. Gold -0.2% at $2,306.80. Bitcoin +0.3% to $57,822.
Ten-year Treasury Yield -3 bps to 4.61%.
Today's Economic Calendar
Auto Sales
7:30 Challenger Job-Cut Report
8:30 International Trade in Goods and Services
8:30 Initial Jobless Claims
8:30 Productivity and Costs
10:00 Factory Orders
10:30 EIA Natural Gas Inventory
4:30 PM Fed Balance Sheet
Companies reporting earnings today »
What else is happening...
Big Tech earnings wind down with Apple (AAPL): Looking for GenAI.
IPOs on watch as Viking (VIK) debuts 10% above IPO pricing level.
UnitedHealth (UNH) CEO confirms $22M ransomware payment.
Earnings miss, but NYCB (NYCB) soars on new financial targets.
Tesla (TSLA) pulls back on gigacasting ambitions after cost cuts.
Embraer (ERJ) explores making planes to rival Boeing and Airbus.
Shorts may be put to the test as Carvana's (CVNA) stock drives higher.
More chip earnings: Qualcomm (QCOM) beats, gives strong outlook.
Pfizer (PFE) raises full-year guidance amid major cost savings push.
J&J (JNJ) seeks $6B settlement to resolve talc-related cancer claims.