Fed increases rates a quarter point and signals a potential end to hikes (5 min read)

The Fed has increased interest rates by another 0.25% to a target range of 5%-5.25%, its tenth increase in just over a year. However, it has hinted this may mark the end of its tightening cycle. While the rise was widely expected, it was unclear whether the Fed would pause rate hikes in the face of concerns over US economic growth and the current banking crisis. The Fed's Chairman, Jerome Powell, said no decision has been made on taking a pause but hinted the change in statement language was "meaningful".

US services sector grows steadily; inflation sticky (4 min read)
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The US services sector, which accounts for over two-thirds of the economy, surprisingly showed steady growth in April with a reading of 51.9 on the Institute for Supply Management (ISM) non-manufacturing PMI. This is slightly above the 51.2 reading in March, indicating growth amid the effect of higher interest rates. Readings above 49.9 typically suggest growth in the overall economy. The majority of the 14 industries that reported growth were upbeat, despite higher prices for inputs, which may indicate inflation could remain elevated.

Olive Garden owner Darden Restaurants buys Ruth’s Chris Steak House for $715 million (2 min read)
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Darden Restaurants is buying Ruth’s Hospitality Group, the parent company of Ruth’s Chris Steak House, for $715 million in an all-cash transaction, valuing the company at $21.50 per share. The deal is expected to close in June if customary closing conditions are met. This is Darden's first acquisition in six years and came amid a slowdown in restaurant deal-making due to rising interest rates. Shares of Ruth spiked more than 30% after the announcement while Darden’s stock was mostly flat.

Carl Icahn targeted by short seller Hindenburg for 'Ponzi-like' structure (3 min read)

Carl Icahn’s Icahn Enterprises (IEP) stock continued to fall and hit a new 52-week low after short-seller Hinderburg accused him of mismanagement. Hinderburg highlighted that IEP’s massive 15.8% dividend yield is achieved using money from new investors, similar to a Ponzi-like structure. The news has also entailed spats from prominent investors like Marc Andreessen and Bill Ackman. However, Icahn denied the allegations and believes IEP's performance would speak for itself over the long term.

A Paradigm Shift in Fixed Income (Video)

The Fed may start to take a pause on rate hikes, but what should investors do with that information? It raised many questions, particularly for fixed-income investors on how they should adjust their allocations and what to buy or sell. This video is a 9-minute conversation with the head of US iShares’ Fixed Income ETFs where he discusses the outlook for fixed income and answers some of those questions.

Apple And Microsoft Hit Record High Weighting In S&P 500 Index (2 min read)
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Two of the world’s largest technology companies, Apple and Microsoft, have seen their weightings in the SPDR S&P 500 ETF Trust (SPY) hit a new record high. Both companies now make up around 14% of SPY’s assets, with Apple and Microsoft accounting for 7.24% and 6.56% respectively. This creates the question of whether the S&P 500 is too heavily tilted in the technology sector. SPY is up 9.1% so far this year, but most were driven by the 35.5% and 27.5% gains in Apple and Microsoft stock respectively.

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Thomas

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