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Good morning investors!

If this is your first time reading, welcome to The Investor’s Edge — a thriving community of more than 15,000 subscribers striving to be better investors with an edge in the market.

Every weekend we publish “The Weekly Wrap-Up” — your ticket to being well informed and staying ahead in the investment game!

This report is designed to help investors of all skill levels break down important stories/topics within the stock market. And best of all, we cut through all of the BS and give you exactly what you need to know in easy to digest, bite sized pieces of content.

Grab your coffee and let’s dive in.

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Market Talk

The market rebounded and broke its three week losing streak thanks to strong earnings from Microsoft and Alphabet.

3 Stories Moving the Market

These are some of the biggest stories from the second half of the week that had an influence on market action.

Key Fed inflation measure rose 2.8% in March from a year ago, more than expected

In March, inflation remained persistent, as indicated by a key measure closely monitored by the Federal Reserve.

The personal consumption expenditures price index rose by 2.7%, exceeding the estimated 2.6%. Excluding food and energy, the index increased by 2.8% compared to the previous year, matching February's level and surpassing analysts' consensus of 2.7%.

Monthly increases for both measures were as expected, rising by 0.3%, consistent with February.

Despite elevated price levels, consumer spending continued, with personal spending increasing by 0.8% for the month, slightly surpassing estimates and maintaining the same pace as February.

Personal income also grew by 0.5%, meeting expectations and surpassing the previous month's 0.3% increase. However, the personal saving rate declined to 3.2%, down by 0.4 percentage points from February and 2 full percentage points from the previous year, indicating households utilized savings to sustain spending.

📚 EDGE-UCATION: Why is the PCE report so important to the Fed?

The Federal Reserve aims for a 2% inflation rate, but the core Personal Consumption Expenditures (PCE) index has been above this target for the past three years.

The Fed prefers the PCE because it adjusts for changes in consumer behavior and gives less weight to housing costs compared to the Consumer Price Index (CPI) from the Labor Department.

While both headline and core measures are considered, Fed officials prioritize the core PCE, excluding food and energy prices, for a more stable view of long-term trends due to the volatility of these categories.

Alphabet issues first-ever dividend and announces $70 billion buyback

Alphabet is officially a dividend stock!

Alphabet announced its first-ever dividend of 20 cents per share and authorized a stock repurchase of up to $70 billion. This decision follows Meta's similar move in February. 

With $108 billion in cash and marketable securities as of March 31, 2024, Alphabet is in a strong financial position to make this move.

The dividend will be distributed to all categories of shares, including Class B shareholders with super-voting rights and Class C shareholders without voting rights. The majority of Google investors hold Class A shares. Shareholders recorded as of June 10 will receive the dividend in that same month.

Co-founders Sergey Brin and Larry Page stand to receive significant payouts thanks to this announcement. Brin will receive $146 million while Page is set to get a dividend payment of $78 million.

*Note - our full breakdown of Alphabet’s quarterly report was sent out in yesterday’s Earnings Recap.

GDP growth slowed to a 1.6% rate in the first quarter, well below expectations

The U.S. economy experienced weaker-than-expected growth in the first quarter, with prices rising at a faster rate.

Gross domestic product (GDP) increased by 1.6% on an annualized basis after adjusting for seasonality and inflation, falling short of economists' expectations of a 2.4% rise. Fixed investment and government spending at the state and local levels helped maintain positive GDP growth, while a decline in private inventory investment and increased imports offset some gains.

Consumer spending rose by 2.5%, lower than the 3.3% increase in the previous quarter and below the Wall Street estimate of 3%.

On the inflation front, the personal consumption expenditures price index, a key measure for the Federal Reserve, increased by 3.4% annually, its largest gain in a year and up from 1.8% in the previous quarter. Excluding food and energy, core PCE prices rose by 3.7%, exceeding the Fed's 2% target.

IE+ Posts of the Week

We continue to push out more and more content every week to give investors that edge. Here are the posts Investor’s Edge+ subscribers received this week.

Edge Report

Mondays are for the investors. Every Monday morning we share exactly what we’re watching in the week ahead, how we’re positioning, and even share a sneak peek into our systems and models. This week we discussed the upcoming earnings reports, the potential for a bounce, and we shared an options strategy to position for Tesla’s earnings. See the full report here:

Earnings Recaps

Every week during earnings season we share a recap of the quarterly reports from stocks that we cover. With 24 of the stocks we cover reporting this week, we released a special mid-week edition of the recap to ensure Edge+ remained in the know. You can see this week’s earnings recaps here:

The Week Ahead

It’s another action packed week ahead as the Fed makes its latest interest rate decision, important labor market data is set to be release and a number of major earnings take center stage.

Earnings Reports

Next week is yet another busy week for earnings, especially for us here at The Investor’s Edge as over 20% of the stocks we cover are scheduled to report. Here is the list of names we will be covering:

• Monday 4/29: Domino’s Pizza

• Tuesday 4/30: Amazon, Eli Lilly, Coca-Cola, AMD, McDonald’s, Starbucks, American Tower, PayPal, and 3M

• Wednesday 5/1: Mastercard, Qualcomm, and VICI Properties

• Thursday 5/2: Apple, MercadoLibre, Coinbase, and Block

• Friday 5/3: Hershey

Here is the full calendar of scheduled earnings releases:

Economic Reports

Next week will be all about the FOMC interest rate decision and jobs data. The market is currently pricing in another pause in interest rates, but the comments from the Fed and Powell will be a major catalyst in market action.

As for the labor market, recent data continues to point to a strong jobs market which adds to inflationary concerns. The market will be watching closely for cracks in the nonfarm payrolls and ADP numbers, though we expect continued strength.

There will also be several PMI reports, as well as a housing report.

Here is the full calendar of events we will be watching:

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Thank you for reading this edition of the Weekly Wrap-Up. Have a great weekend!

Until next time investors!

Mark & Chris

The Investor’s Edge

Disclosure

This is not investing advice. It is very important that you do your own research and make investments based on your own personal circumstances, preferences, goals and risk tolerance.