Broker Check

Market Recap

May 15, 2023

Continuing April’s trend, the major markets spent the first half of May trading in a very narrow range. In fact, since the start of April, the S&P 500’s highest closing level was 4,169 on April 28. That’s less than 3% above its low point of 4,056 two days earlier. On Friday, May 12th, it closed at 4,124.1

The Federal Reserve (Fed) concluded their most recent meeting on May 3rd and again raised interest rates by 0.25%. The increase was widely expected and markets focused their attention on comments made by Fed Chairman Jerome Powell afterwards. Of particular interest were comments Mr. Powell made regarding the possibility of an interest rate cut later this year. He essentially ruled out any cuts because the Fed does not expect inflation to come down quickly enough. Although his statements also notably dropped the reference to future rate hikes (insinuating we may be entering the “pause” phase) markets still reacted by dropping.2  

There are signs that the Fed’s policies are working. Construction and manufacturing, which are especially sensitive to rates, have slowed. Consumer spending also dropped sharply in both February and March. Finally, job gains are slowing while layoffs are inching up.3  

First quarter earnings reports are wrapping up with surprising results. As of Friday, 92% of the S&P 500 companies have reported earnings. Of those companies, 78% have exceeded their net income expectations, surpassing the 10-year average of 73%.4 Expectations had been for softer numbers.

Reviewing returns for the first half of May, the markets posted mixed returns. The Dow Jones Industrial Average (the Dow) and the S&P 500 both modestly fell. As of the close of the market on May 15th, the Dow was down 750 points (2.2%) while the S&P 500 dropped 33 points (0.8%). The NASDAQ Composite Index (NASDAQ) enjoyed a gain of 139 points (1.13%). 


1,4 “Weekly Market Recap; week ended May 12” May 15, 2023 “Dow closes more than 250 points lower Wednesday after Fed hikes rates for a 10th time” May 3, 2023 “The Fed raises interest rates again in what could be its last final attack on inflation” May 3, 2023

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Past performance is no guarantee of future results. No person or system can predict the market. There is no guarantee that any strategies discussed will result in a positive outcome. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. The NASDAQ is an index that tracks the cumulative results on a market capitalization basis of all stocks trading in the NASDAQ system. The Dow Jones Industrial Average is a widely watched index of 30 American stocks thought to represent the pulse of the American economy and markets. Investors cannot invest directly in an index. Diversification does not guarantee a profit or protect against a loss.