As April 2023 drew to a close, US equities were at their highest since the beginning of the year. Treasuries also went down on April 27th thanks to solid earnings reports from several tech companies, essentially softening the impact of a broader report showing decreased economic growth and inflation that remains at record highs.
According to Tallbacken Capital Advisors founder Michael Purves, many people somehow underestimated the performance of bigger tech companies in terms of earnings. As a result, people are only now coming to terms with how big tech can push for greater earnings growth thanks to simply driving efficiencies.
Likewise, the S&P 500 rose by around 2%, while the tech-centric Nasdaq 200 was up by 2.8%. In the case of the latter, the gain was driven by increased advertising revenues which helped social media giant Meta Platforms Inc go over analysts’ estimates for its profit.
Meta reported that its shares were up by around 10%. Other companies that reported strong results included Microsoft and Google’s parent company Alphabet Inc.
Who’s Up?
Toymaker Hasbro Inc was one company whose earnings went beyond experts’ estimates, along with the likes of beverage giant Coca-Cola Co and consumer goods manufacturer Procter & Gamble. Hasbro shares went up by around 15%.
These companies’ performance is seen as proof that America’s corporate sector appears to be thriving despite policy tightening on the part of regulatory authorities, as well as pricing pressures.
A Sense of Dissonance
However, experts are also scratching their heads over what is being referred to as cognitive dissonance – conflicting signals, so to speak – in the latest economic data reports.
According to Dana Peterson, chief economist at The Conference Board, recessions are usually characterized by the collapse of the labor market along with the country’s gross domestic product (GDP.) However, this doesn’t seem to be the case based on the latest figures.
Peterson nevertheless opines that the US is likely to fall into a recession sometime within the second quarter of the year and leading indicators show that it’s probably in progress already.
