4:14pm: Investors keep their powder dry ahead of major earnings news
The Dow closed Monday up 66 points, 0.2%, at 33,875, while the Nasdaq Composite dropped 35 points, 0.3%, to 12,037 and the S&P 500 added 4 points to 4,137. The small-cap Russell 2000 index slid 3 points to 1,789.
The benchmarks improved over the course of the day but closed relatively unchanged ahead of a busy slate of earnings reports this week including Alphabet, Microsoft and Amazon.
“Everyone’s just waiting for tech earnings,” said Chris Harvey, head of equity strategy at Wells Fargo Securities. “This is a very, very busy week for earnings, so we’re just treading water.”
The question is whether there will be enough good news to propel the market higher.
“A lot of the good news is already in the price,” Zaccarelli said. “It’s going to take a lot more for tech earnings this week to really move the needle on the stock prices.”
12.05pm: Alphabet, Microsoft, Amazon on tap to report
US stocks were lower in noon trading as investors await earnings from big technology companies, as well as a new batch of economic data.
At midday, the Dow lost 44 points to 33,765, while the S&P 500 eased 12 points at 4,122 and the tech-heavy Nasdaq slipped 95 points to 11,997.
“Investors are, a little bit, in a wait-and-see mode: waiting to see what happens with big tech earnings this week,” Independent Advisor Alliance chief investment officer Chris Zaccarelli said.
Notable movers included shares of C3.ai, which sank more than 11% after Wolfe Research downgraded the artificial intelligence stock to ‘Under Perform’, citing slowing revenue growth concerns.
9:35am: Calm before the earnings storm
The three major US indexes started the week on a subdued note ahead of another flurry of earnings from corporate heavyweights by the likes of Mcdonald’s, Microsoft, Amazon, and Visa.
Just after the opening bell in New York, the Dow Jones had added 38 points or 0.1% at 33,847 points, the S&P 500 was up 2 points or 0.1% at 4,136 points, while the Nasdaq had edged 10 points or 0.1% lower at 12,062 points.
Stocks were steady on Monday morning ahead of a busy week of earnings, with about 180 companies due to report, as the Fed is in a blackout period ahead of next week’s FOMC meeting, FOREX.com market analyst Fiona Cincotta observed.
“So far, around 18% of S&P500 companies have reported, and 76% have surprised to the upside, possibly because the bar had been set so low,” she said.
Cincotta noted that today's US economic calendar was quiet, but this would ramp up later in the week with US durable goods orders, consumer confidence, US GDP, and core PCE set for release.
“The data comes as the Fed is widely expected to hike rates by a further 25 bps in May, but the picture after that is less clear,” she said.
7:55am: Big tech in the spotlight
Wall Street is likely to open slightly lower as the market braces for a deluge of earnings reports this week - including those from big tech companies - while economic data will provide further insight into the health of the US economy.
Futures for the Dow Jones Industrial Average fell 0.1% in Monday pre-market trading while those for the broader S&P 500 index were a few points lower and contracts for the Nasdaq-100 declined less than 0.1%.
The main US benchmarks reversed earlier losses to end marginally higher on Friday as investors reacted to mixed earnings reports. The Dow closed less than 0.1% up at 33,809, the Nasdaq Composite added 0.1% to 12,072 and the S&P 500 also ticked up 0.1% to 4,134.
“Tuesday sees Microsoft, Alphabet and Visa report numbers, with Meta Platforms on Wednesday, and Amazon and Mastercard on Thursday,” commented AJ Bell investment director Russ Mould.
“Cost-cutting has been a key driver for many of their share prices in recent months, yet investors will want to know that underlying business is still healthy otherwise the recent rally in US tech names could grind to a halt.
“We’re also getting updates from companies that provide popular food and drink products, namely Coca-Cola which reports today and PepsiCo (NASDAQ:PEP) and McDonald’s tomorrow. They are expected to have seen resilient demand given their low-price points,” Mould added.
The earnings season so far has broadly beaten expectations, although the bar was set extremely low this time around, noted Richard Hunter, head of markets at interactive investor.
“The true impact of the Federal Reserve’s tightening policy, which has still yet to be fully proven in economic terms, is also yet to permeate corporate earnings in any meaningful way,” Hunter said. “That being said, growing fears of an earnings recession are never far away, with investors trying to anticipate any worsening of trading conditions.”
US GDP numbers will also be a feature of focus later in the week, with growth expected to have slowed only slightly from the previous reading, Hunter added. The market is expecting the GDP advance reading for the first quarter to show annualised growth of 2% from 2.6% in the fourth quarter of 2022.