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30/04/24 Briefing

Wall Street closed higher on Monday to start a very crucial week. This week nearly 1,300 companies will report earnings results. The Fed will conduct its FOMC meeting. Several key economic data, including jobs data will be released this week too. Market participants will closely watch these events. All three major stock indexes ended in positive territory.

The Dow Jones Industrial Average (DJI) advanced 0.4% or 146.43 to close at 38,386.09. Notably, 17 components of the 30-stock index ended in positive territory while 13 ended in negative zone. The tech-heavy Nasdaq Composite finished at 15,983.08, gaining o.4% due to strong performance by U.S. technology bigwigs.

The S&P 500 rose 0.3% to finish at 5,116.17. Nine out of 11 broad sectors of the broad-market index ended in positive territory while two in negative zone. The Consumer Discretionary Select Sector SPDR (XLY), the Utilities Select Sector SPDR (XLU) and the Real Estate Select Sector SPDR (XLRE) jumped 2.3%, 1.4% and 1.1%, respectively. On the other hand, the Communication Services Select Sector SPDR (XLC) tumbled 1.2%.The fear-gauge CBOE Volatility Index (VIX) was down 2.4% to 14.67. A total of 9.98 billion shares were traded on Monday, lower than the last 20-session average of 11 billion. Advancers outnumbered decliners on the NYSE by a 2.72-to-1 ratio. On Nasdaq, a 1.63-to-1 ratio favored advancing issues.

Tesla Inc. TSLA said that China removed restrictions on its cars after clearing the country’s data security requirements. This development materialized following Tesla’s CEO Elon Musk’s visit to China. Market participants are expecting Tesla’s driver-assistance software Full Self-Driving would soon be available in China, globally the largest market for electric vehicles. Consequently, stock price of Tesla soared 15.3%, marking the biggest single-day gain since March 2021.Shares of Apple Inc. AAPL rose 2.5%, marking its best performance in more than two weeks, following a report that the technology behemoth renewed discussions with OpenAI for phone replacement phone sales with help from generative artificial intelligence (AI) technology.The stock price of Paramount Global PARA rose 2.9% following a Bloomberg report that the Redstone family and Skydance Media CEO David Ellison together made concessions regarding a potential change in control of the company to make it more appealing to other investors.Apple and Paramount carry a Zacks Rank #3 (Hold).

As of Apr 26, 229 companies on the S&P 500 Index reported their financial numbers. Total earnings for these index members are up 2.8% from the same period last year on 3.3% higher revenues, with 78.2% beating EPS estimates and 59.8% beating revenue estimates.At present, total earnings of the S&P 500 Index in first-quarter 2024 are expected to be up 3.8% on 3.7% higher revenues. This follows the 6.8% earnings growth on 4% higher revenues in fourth-quarter 2023 and 3.8% earnings growth on 2.2% higher revenues in third-quarter 2023.

The Federal Reserve will conduct its FOMC meeting on Apr 30-May 1. Market participants are almost certain that the Fed fund rate will stay at its existing range of 5.25-5.5%. However, investors are eagerly waiting for the Fed Chairman’s post-FOMC statement to find nay clue about how long the central bank will keep the higher interest rate intact.

Moreover, investors will try to find out any hawkish comment from the Fed in view of sticky inflation and a resilient labor market. Inflation rate for first-quarter 2024 and March were well above the central bank’s 2% target level.

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