The S&P 500 continues to bounce off a point of resistance in the $417 area, as it has been trading in a sideways range since April. We expect it to break above that area in the near term and move up to the $433 area, where we could encounter some more resistance. We believe the Fed is finished with rate hikes, and the rate increases are having the desired effect.

The market was somewhat encouraged by the April Atlanta Fed wage tracker (5/12) which showed wage growth fell to +5.1%, this was the lowest figure since 2021. This appears to confirm what we are seeing, which is that the uncertainty in banks such as SVB and the other troubled regionals is doing the Fed’s job for them in slowing things down.

Earnings are coming in pretty good; companies are making money even with pressure from interest rate hikes. Of the 457 companies that have reported so far (91% of the S&P 500), overall earnings results are beating estimates by a median of 8%, and 77% of those reporting are beating estimates.

On the top line, overall results are beating estimates by a median of 5%, and 75% of those reporting are beating estimates.