Despite bank-sector turmoil, the stock market notched another positive month in April, thanks in part to strong earnings from several large companies. The average U.S.-stock fund rose a bare 0.03% in April, according to Refinitiv Lipper data, to leave the year-to-date gain at 5.6%. Funds focusing on large-cap stocks did better than most, with gains of more than 1% in the month.
Investors Flock to Safety Plays, but Stock 'FOMO' Lingers
Investors are trying to play offense and defense at the same time.
Money managers are shying away from risk, turning to defensive stocks and Treasurys in their hunt for safe places to invest their cash. Yet they appear equally worried about missing out on a potential stock-market rally. Institutional investors' allocations to equities remain above the long-term trend, and their cash holdings aren't out of line with historical averages either, State Street data show.
A Fed Report on Bank Lending Could Reveal the Start of a Credit Crunch
Banks are almost certainly pulling back on credit in the wake of regional bank failures and stresses in commercial real estate. The question is by how much. We'll get some clues when the Federal Reserve releases data on Monday.
The evidence should be in the Fed's Senior Loan Officer Opinion Survey, a quarterly assessment of bank lending. The Federal Open Market Committee had early access to the results and Fed Chair Jerome Powell, in his Wednesday briefing this past week, said the survey will show a slower pace of lending and tightening standards. A lending slowdown would help the Fed tame inflation. The question is whether banks are pulling back so much that it will tip the economy into a recession. If banks are stepping up demand for collateral and pinching loan sizes, it could snowball into a credit crunch, slowing economic growth and acting like another de facto rate increase.
In New World of Trade Diplomacy, Free Trade and Tariffs Take a Back Seat
BRUSSELS-In just the past year, the Biden administration has opened talks with Japan, the European Union, and more than 20 countries from India to Peru on cross-border economic links. Terms that generally aren't part of these discussions: "free trade" and "tariffs."
Welcome to the new world of trade deals. It's no longer about slashing duties, but a host of other issues-from digital copyright to air quality and technology and product standards-often brokered in government-level agreements rather than full-blown treaties.
Biden, Lawmakers Look to Break Impasse on Debt Ceiling
WASHINGTON-Top Democrats and Republicans are racing to try to find a politically acceptable way to raise the nation's borrowing limit in the coming weeks, diving into talks that President Biden has avoided during months of impasse.
Mr. Biden will host House Speaker Kevin McCarthy (R., Calif.) and other congressional leaders at the White House on Tuesday, the first direct contact in months as officials grapple with the prospect of the first-ever U.S. default as soon as June 1.
Big Oil Has $150 Billion in Cash and Investors Want a Share
Oil-and-gas companies have built up a mountain of cash with few precedents in recent history. Wall Street has a few ideas on how to spend it-and new drilling isn't near the top of the list.
Many companies are cutting costs and raining cash on stock pickers like Berkshire Hathaway's Warren Buffett, who believe the world's thirst for oil will continue for years, if not decades, to come. The promise of money returned to shareholders helped turn energy shares into some of the few bright spots in a dark moment for markets last year, fueled by commodity prices that skyrocketed after Russia's invasion of Ukraine.
Carbon Markets Get Boost From Wall Street
The booming market for carbon credits could go mainstream under a plan to make it easier for financial firms to create products such as exchange-traded funds.
State Street will begin providing its back-office services to clients that want to invest in carbon credits. The giant custody bank and fund administrator says the move will make it easier for big investors to trade the products, a key step toward making them a mainstream investment accessible to individuals.
Pro Take: Airfares Are Still Soaring, and Pandemic Fallout May Keep Them Aloft
Airfares soared on planeloads of cabin-fevered travelers after lockdowns ended. On a tear since April 2021, airfare inflation peaked last fall at 43%, according to the U.S. consumer-price index, easing to 18% in March.
That pullback was a bit of good news for the Federal Reserve, which has been raising interest rates over the past year to try to rein in inflation, with a quarter-percentage-point move most recently last week. Even so, headline inflation is running more than double the Fed's 2% target, with airline fares feeding into that.
Chinese Foreign Minister Scolds U.S. Envoy Over Taiwan
BEIJING-China's foreign minister rebuked the American ambassador in Beijing for what he said was Washington's support of Taiwan and indicated that his side wanted concessions from the U.S. in return for improved lines of communication sought by the White House.
In a readout of their meeting on Monday from China's Foreign Ministry, Qin Gang described the U.S. as hypocritical for trying to bolster communication channels between the countries on one hand, while simultaneously brushing up against what China sees as its Taiwan red lines.
AI Researchers Worry the U.S. and China Will Leave Everyone Else Behind
KIGALI, Rwanda-Amid growing talk of the promise and peril of artificial intelligence, more than 2,000 researchers and engineers from around the world gathered in Rwanda this week to debate contrasting visions for the technology's future.
One vision is to build ever-more-powerful systems such as ChatGPT that aim to exceed human intelligence to boost worker productivity and economic growth. The other is to create more-targeted, small-scale AI solutions to local and global challenges, including tackling climate change, improving healthcare and preserving biodiversity.
Biden's New Immigration Policy Cements End of Liberal Asylum Rules
When he ran for president, Joe Biden promised to restore America's commitment to welcoming people fleeing persecution after Donald Trump spent four years restricting it. Two years into his presidency, Mr. Biden is instead doing the opposite by crafting a new system designed to limit the waves of asylum seekers pressuring the southern border.
Mr. Biden's reversal reflects a broader political shift. In the three years that the U.S. employed Title 42, the pandemic-era measure that made it possible to turn away people seeking asylum at the southern border, lawmakers in both parties have grown increasingly comfortable with a future in which the decadeslong right to cross America's border to seek refuge from persecution is no longer sacrosanct.
Biden to Propose Airline Rule to Compensate Passengers for Delays, Cancellations
The Biden administration intends to propose a new rule that would require airlines to compensate passengers when flight plans change drastically due to causes within the carriers' control, a White House official said.
The rule-making would require airlines to provide cash compensation in addition to refunds, similar to passenger-protection measures required in the European Union, when flights are canceled or passengers endure significant delays due to airline-caused disruption. It would also require airlines to cover expenses such as overnight hotel accommodations and transportation during such significant flight disruptions-services many carriers already provide.
U.S. and Allies Look at Potential China Role in Ending Ukraine War
Some U.S. and European officials said they believe that Ukraine's planned spring offensive could pave the way for negotiations between Kyiv and Moscow by the end of the year, and that China could help bring Russia to the table.
The willingness to encourage negotiations and seek out a role for China in talks represents a shift in Western thinking, particularly in the U.S., which has been highly skeptical of any involvement for Beijing given China's longstanding support for Moscow. Secretary of State Antony Blinken publicly expressed cautious optimism recently that Beijing could help defuse the conflict.
Write to paul.larkins@dowjones.com TODAY IN CANADA
Earnings - 1Q unless stated otherwise:
Ag Growth Intl
Altius Minerals
Aptose Biosciences
Calibre Mining
Dream Impact 2Q
Ensign Energy
Ero Copper
Finning Intl
Hudbay Minerals
Russel Metals
Sleep Country Canada
Suncor Energy
Viemed Healthcare
Westport Fuel
Economic Calendar:
Canadian International Trade Minister Mary Ng meets Indian Commerce and Industry Minister Piyush Goya
Stocks to Watch:
SouthGobi Resources Sees 1Q Net $5.0M-Net $9.0M; Swing to 1Q Net Profit Mostly Due to Higher Coal Prices, Sales Volumes
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Westshore Terminals Investment 1Q EPS C$0.53; 1Q Rev C$96.7M
Expected Major Events for Monday
00:30/JPN: Apr Japan Services PMI
06:00/GER: Mar Industrial Production Index
14:00/US: Mar Monthly Wholesale Trade
14:00/US: Apr Employment Trends Index
22:59/US: ISM Semiannual Report On Business Economic Forecast
23:01/UK: Apr BRC-KPMG Retail Sales Monitor
23:30/JPN: Mar Household Spending
All times in GMT. Powered by Onclusive and Dow Jones.
Expected Earnings for Monday
Aclaris Therapeutics Inc (ACRS) is expected to report $-0.44 for 1Q.
Air Industries Group (AIRI) is expected to report for 1Q.
Akebia Therapeutics Inc (AKBA) is expected to report $-0.15 for 1Q.
Akoustis Technologies Inc (AKTS) is expected to report $-0.23 for 3Q.
Alpha Metallurgical Resources Inc (AMR) is expected to report for 1Q.
Avantax Inc (AVTA) is expected to report $0.15 for 1Q.
Axsome Therapeutics Inc (AXSM) is expected to report $-1.28 for 1Q.
(MORE TO FOLLOW) Dow Jones Newswires
05-08-23 0612ET
