Market Commentary — May 1, 2023

Megacap tech stocks boosted market returns last week, with Microsoft, Apple, Amazon, and Meta Platforms accounting for roughly half of the market’s strong weekly gain. Meta alone was up 14% on an earnings beat. It was also the busiest week for quarterly earnings reports. Cyclical sectors and small caps are lagging their large-cap tech peers.

In economic news, Wednesday’s durable goods data showed a 3.2% rise in March orders, but that was boosted by aircraft and defense spending. Signaling the need for further cutbacks in production and spending, retail inventories rose 0.4% for the month, more than expected and the most since last August. And on Thursday, the advanced estimate of GDP was revised down to 1.1%, below consensus expectations for 2%.

Also heightening fears of a slowdown and possible recession was another bank failure as California’s First Republic Bank was placed in receivership. The renewed banking stress weighed on corporate bonds. But the Fed is still expected to raise rates another 25 bps next week, despite continued signs of economic weakness and concerns about the national debt ceiling.

Besides First Republic, Moody’s had 5 other banks on its watchlist: Zions, Western Alliance, Comerica, UMB Financial, and Intrust Financial.

In ETF news, according to, what 5 ETFs have attracted the most flows YTD?

  1. iShares MSCI USA Quality Factor ETF (QUAL) attracted $8.5 B.
  2. iShares 20+ Year Treasury Bond ETF (TLT) attracted $7.2 B.
  3. Vanguard S&P 500 ETF (VOO) attracted $7.2 B.
  4. JPMorgan Premium Equity Income ETF (JEPI) attracted $7.0 B.
  5. JPMorgan BetaBuilders Europe ETF (BBEU) attracted $5.7 B.

In total BBEU manages $9.52B, JEPI oversees $24.40B, VOO monitors $290.20B, while TLT and QUAL manage $36.02B and $27.49B respectively. Year-to-date return wise: BBEU +12.1%, JEPI -0.1%, VOO +6.8%, TLT +3.6%, and QUAL +8.6%.

And across the pond, HSBC AM has plans to launch 4 funds with Vanguard-style umbrella structures offering both ETFs and mutual funds. In other filing news, a new pedigree activist active ETF has filed, KraneShares Rockefeller Ocean Engagement ETF, sub-advised by Rockefeller & Co. LLC (JDR family office), it will invest in a portfolio of Ocean Related Companies (Leaders, Solutions, Improvers) and engage them to have a positive impact on returns and ocean sustainability.

Next week is Fed week. Could the Fed pause next week? A May pause, signaling a possible hike in June is an option, but the CME FedWatch tool is still pricing in an 83.9% chance of a hike next week, even though the odds dropped from 90% at the start of the week.

Stay tuned and have a great week FedWatching.

Jane Edmondson
CEO and Co-Founder

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