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Will Reports from Consumer Companies Shed Light on US Economy?

DMO 20.04.2023 article image.jpg
Miguel A. Rodriguez
Miguel A. Rodriguez
20 April 2023

Corporate earnings reports did little for the stock markets in the US and Europe while the Dollar slightly fell against the Euro and oil declined. Now markets shift their attention to the results of consumer companies for signs of changes in inflation and economic slowdown. 

Stocks in the US and Europe ended the day with little movement yesterday as investors evaluated company earnings reports and kept an eye out for any indication of the Federal Reserve’s (Fed) upcoming policy changes. 

Ahead of its first-quarter earnings and following its sixth price decrease in the US this year, Tesla Inc. saw a slight decline of under 1%. Following a poor prediction, Netflix Inc. slumped 3.8% while Morgan Stanley ended the day on a good note. This came after the Wall Street bank reported a drop in quarterly profit and after rival Goldman Sachs Group Inc. Announced a 19% drop in profit.   

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Even though the start of earnings season has been generally positive for stocks, investors will be keenly examining the results of major corporations and consumer companies for indications of inflation and a slowdown in the economy that might harm returns. 

As the stress in the US banking industry has been easing, bond rates have increased across the curve on anticipation of a 25 bps increase at the upcoming Fed meeting. 

The US economy has stalled in recent weeks, according to the Fed’s Beige Book report, as job hiring and inflation have slowed and access to credit has been restricted by rising interest rates, although this is also partially because of recent developments in the banking sector. 

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Following the upward correction of recent days, the US Dollar slightly declined against the Euro yesterday. The Euro is supported by expectations of further rate increases by the European Central Bank, which is anticipated to continue the currency's upward trajectory further. 

Despite the fact that yesterday's release of crude oil stocks indicated a decline of 4,561 M, far below estimates, oil prices fell further during the session. Crude Oil is weak because of the anticipated fall in global demand brought on by the slowdown in the economy. 

 

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Sources: Bloomberg, Reuters 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.