Sat, May 18, 2024

Earnings Week Beckons: Dow Unchanged, S&P, Nasdaq Diverge

Stocks on Wednesday

Quick Look:

  • Dow Jones futures remain stable, while S&P 500 futures dip and Nasdaq futures rise, indicating mixed market sentiment.
  • Upcoming earnings reports from major banks and companies like Delta Air Lines spotlight corporate health amidst economic uncertainty.
  • This week’s economic events and inflation data are critical for the Federal Reserve’s interest rate decisions.
  • The first quarter earnings season begins with a keen eye on growing sectors amidst a backdrop of modest expectations.

Dow Jones futures remained largely unchanged on Sunday night. In contrast, S&P 500 futures tilted slightly lower, and Nasdaq futures edged higher. Thereby hinting at a fragmented market sentiment. Investors gear up for a week packed with economic updates and the beginning of the earnings season.

Earnings Eyed Amid 4.42% Yield Rise, Oil Drops Over 1%

Crude oil futures took a hit, falling more than 1%, and Treasury yields rose to 4.42%. This change was partly due to easing tensions in the Middle East, the stock market braces for a slew of corporate earnings reports. Major banks, including JPMorgan, Wells Fargo, BlackRock, Citi, and Delta Air Lines, are set to report their earnings, offering investors a glimpse into the corporate health of various sectors.

The stock market last week witnessed a pullback, highlighted by Thursday’s downside reversal. Despite the pressure on the uptrend, a rebound on Friday, alongside signals of buying among leaders and a rangebound market, provided a mixed picture of the market’s resilience.

Earnings Watch: Semiconductor Leaders Nvidia, Broadcom in Focus

The technology sector remains in focus, particularly companies like Nvidia, Broadcom, Taiwan Semiconductor, and the recent IPO of Astera Labs, alongside ARM Holdings and Super Micro Computer. These companies could be forming or working on potential bases with Super Micro Computer, linked to AI chips. Besides, they are one of the top S&P 500 performers in 2024. Meanwhile, Tesla retreated amid weak Q1 deliveries. However, Elon Musk’s announcement of a robotaxi unveiling on August 8th keeps the company in the spotlight.

The IBD listings, featuring companies like Nvidia, ARM Holdings, Broadcom, and Super Micro, underscore the leading positions of these tech giants in the market. Their performance will be closely watched as the stock market rally attempts to find footing after a week of losses, with major indices showing signs of recovery.

Inflation Expectations: CPI Predicted at 3.7%, Rate Cut Odds 53.2%

This week is also significant for economic events, with the Treasury yield hitting a 2024 high of 4.435. Moreover, the odds of a June Fed rate cut stand at 53.2%. The upcoming inflation print could significantly influence the Federal Reserve’s stance on interest rates, especially given the Fed forecasts for potential rate cuts and Neel Kashkari’s cautious statement on inflation progress.

The labour market remains robust, providing some optimism amidst inflation concerns. The March Consumer Price Index is expected to show an annual gain of 3.5% and a core CPI rise of 3.7%, offering crucial insights into the inflation trajectory.

Earnings Season Begins: Delta Up First, 10.9% Growth Eyed

As the first quarter earnings season starts, expectations for growth are modest, with Delta Air Lines among the first to report. The focus will be on earnings growth sectors and the economic impact, with a full-year earnings growth expectation of 10.9%.

The week ahead holds significant potential for market movements, with investors eyeing earnings reports, economic updates, and inflation data. The mixed sentiment in futures trading reflects the market uncertainty and anticipation as participants seek direction in a complex financial landscape.

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