Concerns over the Federal Reserve's efforts to control surging inflation by raising interest rates, the continuing Ukraine-Russia war, exacerbated supply chain disruptions, and high oil prices, have driven a massive market sell-off of late. Furthermore, these factors have been increasing the odds of the economy slipping into recession this year. The 10-year Treasury yield has risen to its highest level since November 2018.
According to the U.S. BEA, GDP contracted at an annualized pace of 1.4% in the first quarter. However, first-quarter corporate earnings have been good so far. Many companies have reported robust financial performance, surpassing earnings estimates. According to FactSet, among the 55% of S&P 500 companies that reported first-quarter results as of April 29, 80% have exceeded the Street’s EPS projections, which is higher than the 77% five-year average.
