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Stocks Struggle Despite Strong Economic Data and Earnings Reports

Dow Jones Records Worst Week in Six Weeks

Despite some positive economic data and earnings reports, the US stock market struggled last week, with all three major averages closing lower for the week. Although the S&P 500, Dow Jones, and Nasdaq Composite all closed slightly higher on Friday, they were unable to recover from the losses incurred earlier in the week.

US Manufacturing and Services Sectors See Solid Growth

The week's economic data did bring some good news, with the US Manufacturing and Services sectors seeing solid growth. The S&P Global's flash reading on the US Manufacturing Price Index exceeded Bloomberg's consensus estimates, with the Services PMI hitting a 12-month high and the Manufacturing PMI reaching a six-month high. S&P Global reported "solid growth in activity was seen across both the manufacturing and service sectors."

Procter & Gamble Raises 2023 Organic Sales Growth Forecast

Among the companies reporting their earnings, Procter & Gamble raised its forecast for 2023 organic sales growth to 6%, which caused its shares to rise by 3.45%. P&G chairman and CEO Jon Moeller stated that the company isn't seeing any signs of a recession based on consumer habits, although customers are using the company's products more carefully.

Market Focus Turns to Big Tech Earnings and Initial Q1 GDP Report

Elsewhere in earnings, mining company Freeport-McMoran fell by 4.10%, while shares of SAP rose nearly 6% as the company topped estimates for revenue and earnings per share. However, Thomas Martin, Globalt Investments Senior Portfolio Manager, expressed concern over the mixed indications from various companies within the same industry and suggested that it might take another quarter or two to get definitive information.

Amazon's stock rose by 3.03% following a report that Whole Foods plans to cut several hundred corporate jobs as part of a reorganization. Oil futures were near the flatline, and Cleveland Fed President Loretta Mester suggested that interest rates need to rise above 5% due to stubborn inflation.

With the Fed in its quiet period, market focus will turn to big tech earnings next week. Apple, Amazon, Alphabet, and Meta are all set to report their first quarter results, and the initial Q1 GDP report is expected to offer insight into the health of the US economy in 2023.

However, Factset reported that through Friday, only 18% of S&P 500 companies had reported their first-quarter results, with aggregate earnings of 5.8%, below the five (8.4%) and ten-year (6.4%) averages. Therefore, it remains to be seen how the stock market will perform in the coming weeks, despite some positive economic data and earnings reports.

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