In theory, looking ahead at markets this week should be focusing on the big quarter just ended and what the prospects are for stocks and the economy.
In theory.
But a lot of attention will be paid to the bitter, emotional proxy fight for control of the Walt Disney Co. (DIS) .
At the same time, there is a huge report that will move markets this week: the monthly jobs report due Friday before U.S. markets open.
The expectation is for the U.S. unemployment rate to hold at 3.9%, with non-farm payrolls growing by 205,000. A big gain could spook bond markets and sent interest rates higher — and stocks lower.
Related: The Fed’s stock market influence, like inflation pressure, continues to fade
In addition, Monday’s markets will have to weigh whether a Friday report was good or bad. The Bureau of Economic Analysis reported that its Personal Consumption Expenditures Price Index rose 2.5% year over year. Its core measure showed a 2.8% increase.
Fed Chairman Jerome Powell said the numbers were in line with estimates. Markets won’t weigh in until Sunday night.
The great first quarter stock market
How good was the market in March?
The Standard & Poor’s 500 Index rose 10.2%, its best first-quarter performance since 2019. The Dow added 5.6%, and the Nasdaq Composite was up 9.1%.The S&P set eight new closing highs during the month. The Dow hit three and the Nasdaq two.
All 11 sectors of the index showed gains during the month, led by the energy sector, up 10.4%, and materials up 6.2%.
The weakest sector was Consumer Discretionary stocks, up just 0.01%. The group includes Tesla (TSLA) , down 12.9% for the month, retailer Lululemon Athletica (LULU) , down 16.4%. was the weakest. Dow component Nike (NKE) was off 9.6%.
Chip maker Micron Technology (MU) was the top S&P 500 stock in the month, up 30.11%. But it was the only semiconductor stock in the the top 10.
Nvidia (NVDA) was up only 14.2%. It’s still up 82.5% on the year.
There is great confidence among traders that the market rally that started in October has the power to continue — absent a war or another bitterly fought federal election season like 2020.
Two factors one hears the traders cite:
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The economy and markets have been able to carry on despite the current interest-rate environment.
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The Federal Reserve may not be in a rush to cut interest rates, but the central bank doesn’t appear interested in raising them either. The 10-year Treasury yield moved up to about 4.33% from 3.9% at the end of 2023 but drifted back to 4.2%.
The enormous and expensive fight over Disney
Meanwhile, the proxy fight for control of Walt Disney (DIS) will increasingly grab eyes and ears all the way into Disney’s annual meeting that starts at 1 p.m. EDT (10 a.m. PDT) on Wednesday. That’s when the votes will be counted on whether candidates from two groups of activist investors will be elected to the Disney board.
A note: This is a virtual meeting.
The Disney battle is an election where you can’t poll the voters — in this case, the actual shareholders — to any reliable degree. They just mark their proxies and send them in.
Normally, big investors dominate the voting in a proxy fight, but small investors control around 40% of Disney’s shares, and they may well decide the battle.
Some small investors are just in the game to make money from the stock. Others were given shares as children or bought some with earnings from high-school jobs and just haven’t sold.
Will a $75 million fight cost $100 million?
The Disney fight is primarily between Trian Fund Management, managed by activist investor Nelson Peltz. Trian controls 1.8% of Disney’s shares wants to vote Peltz and former Disney executive Jay Rasulo onto the board.
More on Disney
A second group, known as the Blackwells Group, led by Blackwells Capital Management, is also in the fight, hoping to elect three candidates to the board.
Peltz has estimated he’s spent $25 million on his campaign, The New York Times reported. Disney guesses their costs at $40 million.
Tensions are rising as investors big and small take sides. Peltz has even weighed in about the kinds of entertainment the company produces.
He was criticized recently for suggesting Disney should stop making films with all-African-American casts or all-female casts. Disney’s Marvel unit did produce Black Panther in 2018, which grossed $1.3 billion world-wide.
Presumably, either of the groups trying to get on the Disney board would advocate strongly for trimmed production spending for Disney’s entertainment assets and lower operating costs for its theme parks. And greater direct returns to shareholders.
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Disney’s shares have struggled since peaking at about $200, in early 2021, falling to as low as $79.33 on October 27, 2023.
That was, ironically, the day the market bottomed and started its big fall rally.
Disney’s price as of March 28 was $122.36. Its 35.2% first-quarter gain was the best performance of any stock in the Dow Jones Industrial Average. It was also the ninth-best year-to-date performer in the Standard & Poor’s 500 Index.
Moreover, it’s up 54% from the Oct. 27 market bottom, second-best among the Dow stocks after the 61% gain for American Express (AXP) .
A light week on reports and earnings
Aside from the jobs report, the week ahead does not feature huge economic reports that can send stocks and bonds higher or detail the big rally that started in October.
But watch the OPEC meeting this week. Oil prices are up 16% so far in 2024. And retail gasoline prices have moved up nearly 14% this year, a faster pace than a year ago.
No change in policy is expected. Reuters reported global oil prices are rising because of worries that war in Middle East and attacks on Russian energy infrastructure could disrupt supplies.
As of Saturday, the American Automobile Association’s daily price survey showed the national price of regular unleaded gasoline at $3.536 a gallon.
Only 137 fourth-quarter earnings reports are due this week. Among the biggest is payroll services provider Paychex (PAYX) on Tuesday. The consensus estimate is $1.36 a share, up from $1.29 a year ago.
The first-quarter earnings season, however, starts at 8:30 a.m. on April 12 when JP Morgan Chase (JPM) reports first-quarter results. Investors admire the banking giant; shares are up 17.8% this year. The average analyst estimate: $4.16 a share.
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