Fourth Week of April 2024

THE WELL-TH NOTES
Weekly data-driven insights on the markets and economy

1. Low Tide

Interest rate fears dampened markets Wednesday following a slew of strong corporate earnings reports. The S&P 500 rose just 0.02%, the Dow Jones fell 0.11% and the Nasdaq bumped 0.1% higher. Investors await news from the Fed’s preferred inflation gauge, the core personal consumption expenditures price index, on Friday.[i]

2. Waiting Game

Treasury yields rose Wednesday as investors awaited fresh economic data to assess the potential of Fed rate cuts this year. The 10-year yield climbed 4.6 basis points to 4.64%. The 2-year yield rose 2.4 basis points to 4.93%. Fed officials have appeared cautious about a timeline for rate cuts in recent weeks, and investors will continue to watch the Fed for hints about the path ahead for monetary policy.[ii]

3. GDP Slump

U.S. gross domestic product (GDP), a broad measure of goods and services produced in the January-through-March period, increased at a 1.6% annualized pace, below the 2.4% estimate. The reading came in significantly lower than fourth quarter GDP, which was revised up to 3.4%. Net exports subtracted 0.86 percentage points from the growth rate while consumer spending contributed 1.68 percentage points.[iii]

4. Welcome Home

Sales of new U.S. single-family homes rebounded in March from February’s downwardly revised level. New home sales jumped 8.8% m/m, and 8.3% y/y, in March to a seasonally adjusted annual rate of 693,000 units, the highest level since September. February sales were revised down to 637,000 units from the previously reported 662,000 units. The median new house price in March increased 6% to $430,700 from February but slipped 1.9% from a year ago. Overall house prices continue to rise because of the supply squeeze in the home resale market.[iv]

5. Crude Prices

Investors are closely watching conflicts in the Middle East to gauge whether escalating hostilities between Israel and Iran could threaten global oil supplies and drive up energy prices. Crude prices, which rose to their highest levels in months after Iran’s April 13 drone and missile attack on Israel, rose above $90 on Friday before relinquishing those gains. U.S. benchmark crude rose 11 cents higher to $82.22 per barrel. Brent crude, the international standard, gained 7 cents to $87.18 per barrel.[v]

6. Reacceleration

Despite reporting a revenue and earnings miss, investors seemingly cheered Tesla’s announcement that it would accelerate the launch of more affordable vehicles, its shares gaining 12% on Wednesday for it’s biggest one-day gain in 2024. Tesla stock has still lost 34% so far this year. Tesla reported first quarter adjusted earnings per share of $0.45, below the estimated $0.52, on revenue of $21.30 billion, which missed forecasts for $22.3 billion. Revenue fell 9% from a year ago, Tesla’s first drop in four years. On the company’s earnings call, CEO Elon Musk said the timelines for new vehicles could be in early 2025 if not later this year.[vi]

7. UAE’s Record Rainfall

Last week, the United Arab Emirates saw the heaviest rains in the 75 years that records have been kept. A record 10 inches of rainfall was recorded in Al Ain, a city bordering Oman. It was the largest ever in a 24-hour period since records started in 1949.[vii] The United Arab Emirates’ cabinet has approved 2 billion dirhams ($544.60 million) to deal with damage to homes from the storm.[viii]

8. All Aboard!

This week, Brightline West officially broke ground on the nation’s first true high-speed rail system which will connect Las Vegas to Southern California. Brightline West will run zero emission, fully electric trains capable of speeds of 200 miles per hour along this 218-mile railway. The project was recently awarded $3 billion in funding from President Biden’s Bipartisan Infrastructure Bill. The rest of the project will be privately funded and has received a total allocation of $3.5 billion in private activity bonds from USDOT.[ix]

[i] Evans, Brian and Alex Harring, “S&P 500 closes little changed as higher bond yields dampen earnings enthusiasm,” CNBC, April 25, 2024, https://www.cnbc.com/2024/04/23/stock-market-today-live-updates.html. Accessed April 25, 2024.

[ii] Evans, Brian and Sophie Kinderlin, “Treasury yields rise as traders await key U.S. economic data,” CNBC, April 25, 2024, https://www.cnbc.com/2024/04/24/us-treasury-yields-as-investors-weigh-economic-outlook.html. Accessed April 25, 2024.

[iii] Cox, Jeff, “GDP growth slowed to a 1.6% rate in the first quarter, well below expectations,” CNBC, April 25, 2024, https://www.cnbc.com/2024/04/25/gdp-q1-2024-increased-at-a-1point6percent-rate.html. Accessed April 25, 2024.

[iv] Mutikani, Lucia, “US new home sales rebound to six-month high; rising mortgage rates a concern,” Reuters, April 24, 2024, https://www.reuters.com/markets/us/us-new-home-sales-rebound-march-2024-04-23/. April 25, 2024.

[v] Sherter, Alain, “Stocks waver and oil prices rise after Israeli missile strike on Iran,” CBS News, April 19, 2024, https://www.cbsnews.com/news/israel-iran-missile-strike-stock-oil-prices/. Accessed April 25, 2024.

[vi] Subramanian, Pras, “Tesla stock surges as EV maker will ‘accelerate’ the launch of cheaper cars,” Yahoo Finance, April 24, 2024, https://ca.finance.yahoo.com/news/tesla-earnings-q1-175358835.html. Accessed April 25, 2024.

[vii] Cornwell, Alexander, “What caused Dubai floods? Experts cite climate change, not cloud seeding,” Reuters, April 18, 2024, https://www.reuters.com/world/middle-east/what-caused-storm-that-brought-dubai-standstill-2024-04-17/. Accessed April 25, 2024.

[viii] “UAE announces $544.6 million to repair homes: How the flood-hit country is inching back to normalcy,” The Indian Express, April 25, 2024, https://indianexpress.com/article/world/uae-dubai-floods-repairs-homes-aid-emaar-9291031/. Accessed April 25, 2024.

[ix] “Making history: Brightline West breaks ground on America’s first high-speed rail project connecting Las Vegas to southern California,” Brightline West, April 22, 2024, https://www.brightlinewest.com/media/press-releases/2024/brightline-west-breaks-ground-on-americas-first-high-speed-rail-project-connecting-las-vegas-to-southern-california. Accessed April 25, 2024.