Everything to Know about Macro and Markets
All main stock indexes and all 11 of the S&P 500 (SPX) sectors surged on Friday, pulling the markets higher for the week. The two back-to-back weekly increases helped stocks recover much of the ground lost during three weekly declines in April.
The Fed Rollercoaster
The S&P 500 lost over 4% last month, its first drop after a five-month rally, with Utilities the only sector to produce positive results in April. Worries about resurging inflation gave rise to speculations that the Federal Reserve might return to a policy of monetary tightening, which weighed down stock performance. This added to investors’ uneasiness about stocks’ overstretched valuations.
Investor anxiety was palpable ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday, swinging in opposite directions. Though Fed Chair Jerome Powell did move from “when” to “if” about the prospect of the rate cuts this year, he strongly pushed back against the possibility of a rate hike. With the “higher for longer” doctrine having already sunk in, markets breathed out a sigh of relief upon hearing the news.
Powell also reiterated that the central bank remains data-dependent, continuing to closely follow the incoming economic reports for input into their policy decisions. So, when Friday’s labor-market report came out “just right”, showing weaker-than-expected job gains and easing wage growth, investors interpreted it as a sign that rate cuts are still on the table for 2024.
An Apple a Day
Markets were also propped up by strong earnings reports, particularly the one from Apple (AAPL), the last member of the Magnificent Seven group to release its results this season. The consumer electronics behemoth reported stronger-than-expected quarterly results, and also announced that it will repurchase $110 billion in shares, the largest-ever buyback for any company.
Overall, this is turning out to be a strong earnings season. With 80% of the S&P 500 having reported actual results for Q1 2024, 77% have exceeded EPS expectations. At the moment, the blended results (actual and estimated results combined) stand at a 5% earnings growth year-on-year. If this rate is sustained through the remaining reports, this would mark the fastest earnings growth since Q2 2022.
Notable Stock News
¤ Amgen (AMGN) saw its stock surge almost 12% after the biotechnology company topped analysts’ EPS estimates by a wide margin and lifted FY2024 guidance. In addition, the company also gave an update regarding its experimental obesity treatment, saying that its ongoing Phase 2 trial is showing encouraging results.
¤ Qualcomm (QCOM) was the best performer in the tech subsector last week after reporting a stellar result in its fiscal Q2 2024, beating analysts’ estimates for revenue and EPS. The world’s largest smartphone chipmaker also lifted its FY 2024 guidance, signaling a phone market recovery.
¤ Starbucks (SBUX) shares sunk over 17% during the week after the company posted disappointing quarterly results, missing revenue and earnings estimates.
¤ CVS Health (CVS) was another notable underperformer, dropping almost 17% over the week as the healthcare giant missed revenue and earnings expectations for Q1 2024 and slashed its full-year guidance.
¤ Cloudflare (NET) saw its stock tumble despite topping earnings projections in Q1, as the cybersecurity company issued a weaker-than-expected revenue projection for the ongoing quarter.
Upcoming Earnings and Dividend Announcements
The Q1 2024 earnings season is past halftime, and most of the stocks at the center of investors’ attention have already released their results. However, a large number of notable earnings releases are scheduled for this week.
This week’s spotlight will be on earnings releases from Berkshire Hathaway B (BRK.B), Walt Disney (DIS), Reddit (RDDT), Arista Networks (ANET), Arm Holdings (ARM), Palantir Technologies (PLTR), Uber Technologies (UBER), Robinhood Markets (HOOD), and Roblox (RBLX).
In addition, there are a slew of reports from noteworthy companies from all sectors, including Vertex Pharmaceuticals (VRTX), McKesson (MCK), Occidental Petroleum (OXY), Electronic Arts (EA), Rockwell Automation (ROK), Emerson Electric (EMR), Akamai (AKAM), AppLovin (APP), and Gen Digital (GEN).
Ex-Dividend dates are coming this week for Intel (INTC), Metlife (MET), Texas Instruments (TXN), Ford Motor (F), Kenvue, Inc. (KVUE), Cheniere Energy Partners (CQP), Walmart (WMT), Wells Fargo (WFC), Pfizer (PFE), International Business Machines (IBM), Paychex (PAYX), and other dividend-paying firms.
For more exclusive market insights and content from TipRanks Macro & Markets research analyst Yulia Vaiman, click here.
