What’s in Bloom – Third Week of April 2024

By Anna Nehrbas on April 18, 2024

Weekly data-driven insights on the markets and economy

1. Slippery Slope
   The S&P 500 slipped 0.6% Wednesday, extending its losing streak while corporate earnings season ramps up. The Nasdaq Composite also slipped 0.9% and the Dow Jones fell 0.4%. Information technology stocks led the S&P 500 lower with a sector-wide drop of more than 1%. Utility names helped mitigate losses as the sector climbed nearly 1%.[i]
2. Yield Dip
   Treasury yields dipped on Wednesday as investors digested comments from Fed policymakers about the state of the economy and monetary policy outlook. The 10-year yield fell almost 4 bps to 4.62%. The 2-year yield was last at 4.95% after retreating by nearly 2 bps, trading slightly below the 5% mark it briefly crossed on Tuesday.[ii]
3. China’s Growth Target
   In the first quarter, China’s GDP grew 1.6% q/q, compared to the expected 1.4%, and grew 5.3% y/y, beating the 5.2% expansion in the fourth quarter of 2023 and the 4.6% growth expected for this quarter. Growth was driven in part by external demand, as export volume grew by 14% y/y. Industrial output for March grew 4.5% y/y, missing expectations of 6%. Retail sales grew 3.1% y/y, lower than the expected 4.6%. Beijing has set a 2024 growth target of around 5%. The strong first quarter growth is expected to make the government comfortable with its current policy stance.[iii]
4. Short Supply
   Pharmacists warn of a growing number of drugs in short supply around the U.S. There were 323 active medication shortages through March this year, surpassing the previous high of 320 shortages in 2014, according to the American Society of Health-System Pharmacists. This organization, which has published the metric since 2001, says the number of hard-to-get drugs has surpassed the previous record high from a decade ago.[iv]
5. Hitting the Brake
   Tesla shares dropped almost 6% on Monday and another 2.7% on Tuesday, falling to the lowest levels since April of last year, after CEO Elon Musk announced Tesla is eliminating more than 10% of its global workforce. Tesla shares dropped 29% in the first quarter, the worst period since late 2022 and the third-steepest drop since its initial public offering in 2010. The stock is 60% below its peak reached in November 2021.[v]
6. Push and Pull The lowest wage Americans said they were willing to accept to take a new job reached a record high in March, according to a New York Federal Reserve report. The average reservation wage, or the lowest wage respondents would be willing to accept for a new job, was $81,822 as of March, up substantially from the $73,391 seen in the last report in November of 2023. The report also found declining satisfaction with wage and non-wage compensation in March amid inflation pressures and labor market tightness. Despite the higher wages workers are seeking, the report found that employers were offering lower starting wages, with the average offer at $73,668 in March compared to $79,160 last November.[vi]
7. Bank Earnings
   While a surge in equity capital markets and debt market activity is boosting investment banking revenue growth at the big five Wall Street banks, their net interest income has failed to impress investors. JPMorgan Chase & Co, the biggest U.S. bank by assets, posted a 6% profit increase but its net interest income forecast fell short of expectations. Its shares slid 6.5%. Wells Fargo & Co’s stock inched lower after profits fell 7% as net interest income dropped on weak borrowing demand. Citigroup posted a loss after spending on employee severance and deposit insurance. Its stock dipped 1.7%.[vii]
8. Caitlin Clark Effect: Part II
   Former Iowa women’s basketball star and the NCAA’s all-time leading scorer Caitlin Clark is off to the WNBA, as the number 1 overall draft pick by the Indiana Fever in Monday’s draft. Caitlin Clark will receive a four-year contract worth a total of $338,056, earning approximately 0.6% of what her NBA counterparts are making in their four-year contracts.[viii] The NBA’s 2023 number 1 draft pick, San Antonio Spurs player Victor Wembanyama, signed a four-year contract totaling $55,174,766 last year. Clark already has multiple endorsements she will carry with her from college to the WNBA, giving her a $3.4 million valuation.[ix]

[i] Harring, Alex and Lisa Kailai Han, “S&P 500 heads for fourth straight losing session: Live updates,” CNBC, April 17, 2024, https://www.cnbc.com/2024/04/16/stock-market-today-live-updates.html. Accessed April 17, 2024.

[ii] Harring, Alex and Sophie Kinderlin, “Treasury yields tick lower as investors digest remarks from Fed officials,” CNBC, April 17, 2024, https://www.cnbc.com/2024/04/17/us-treasury-yields-as-investors-digest-remarks-from-fed-officials.html. Accessed April 17, 2024.

[iii] Hui Jie, Lim, “China’s economy grew 5.3% in the first quarter, beating expectations,” CNBC, April 15, 2024, https://www.cnbc.com/2024/04/16/chinas-q1-gdp-grew-5point3percent-in-the-first-quarter-beating-expectations.html. Accessed April 17, 2024.

[iv] Gibson, Kate, “Hundreds of drugs are in short supply around the U.S., pharmacists warn,” CBS News, April 12, 2024, https://www.cbsnews.com/news/drug-shortages-adderall-adhd-chemo/. Accessed April 17, 2024.

[v] Goswami, Rohan and Laura Kolodny, “Tesla shares fall to lowest in almost a year after job cuts heighten concerns about waning demand,” CNBC, April 16, 2024, https://www.cnbc.com/2024/04/16/tesla-layoffs-send-shares-down-on-concerns-about-weakening-demand.html. Accessed April 17, 2024.

[vi] Derby, Michael S., “US workers seeking record wages to consider new jobs, New York Fed says,” Reuters, April 15, 2024, https://www.reuters.com/markets/us/us-workers-seeking-record-wages-consider-new-jobs-new-york-fed-says-2024-04-15/. Accessed April 17, 2024.

[vii] Culp, Stephen, “Wall St ends sharply lower on mixed earnings, sticky inflation, geopolitical fears,” Reuters, April 12, 2024, https://www.reuters.com/markets/us/futures-steady-ahead-big-bank-earnings-2024-04-12/. Accessed April 17, 2024.

[viii] Curtright, Austin, “Caitlin Clark WNBA salary, contract terms: How much will she earn as No. 1 pick?,” USA Today, April 16, 2024, https://www.usatoday.com/story/sports/wnba/2024/04/16/caitlin-clark-wnba-salary-contract-fever/73337860007/. Accessed April 17, 2024.

[ix] Tucker, Grace, “Caitlin Clark’s WNBA salary is less than 1% of what her NBA counterparts make. What we know,” Cincinnati Enquirer, April 16, 2024, https://www.cincinnati.com/story/sports/2024/04/16/caitlin-clark-wnba-salary-less-than-1-percent-nba-rookie-pay/73344005007/. Accessed April 17, 2024.