4:03pm: Earnings positives outweigh First Republic fears
The Dow closed Friday up 273 points, 0.8%, to 34,098, the Nasdaq Composite added 84 points, 0.7%, to 12,227 and the S&P 500 improved 34 points, 0.8%, to 4,170. The small-cap Russell 2000 index added 16 points, 0.9%, to 1,767,
Earnings season is in full swing with more than half of S&P 500 companies reporting thus far. Of those, 80% have beaten Street expectations, according to FactSet data. That's in-line with historical averages.
Investors have liked what they've seen.
“The market should follow earnings,” said Gina Bolvin, president of Bolvin Wealth Management. “That is the mother’s milk of the market.”
The main blemish of the day was First Republic Bank (NYSE:FRC), which is seeking a rescue package. Its shares tumbled nearly 50% today and are down nearly 80% since Monday's close.
12.05pm: Dow on track for best monthly gain since January
US stocks were higher in noon trading despite media reports that First Republic Bank (NYSE:FRC) is most likely headed for receivership, sending its shares plummeting more than 46%.
At midday, the Dow rose 219 points to 34,045, while the S&P 500 added 24 points at 4,160 and the tech-heavy Nasdaq gained 32 points to 12,174.
“Today is reflective of sort of a three-legged stool,” AXS Investments CEO Greg Bassuk said.
“Earnings, economic data and the Fed continue to be the investor narrative,” he added.
Other notable movers included shares of Amazon.com, Inc, which fell 4% after the online retail giant said its cloud business decelerated in the first quarter.
9:40am: Amazon, Snap losses drag on Nasdaq
The rally in US stocks boosted by strong earnings from the tech sector is over for now with the three major indexes starting the final trading day of the week in the red.
Less optimistic quarterly results from the likes of Amazon and Snap, concerns around the banking sector as First Republic Bank (NYSE:FRC) continues to seek out a rescue deal, and data reiterating sticky inflation weighed on sentiment.
The Federal Reserve’s preferred measure of inflation, the core personal consumption expenditures (PCE) which removes the more volatile food and groceries components, cooled less than expected in March to a 0.3% increase month-over-month and 4.6% over the last year. The Street had been expecting an annualized reading of 4.5%.
“The data comes after GDP data yesterday showed that the US economy grew at a slower pace than expected in 1Q and after data earlier in the week, which showed that US consumer confidence fell to a nine-month low, raising fears that the US economy could fall into recession later this year,” noted FOREX.com market analyst Fiona Cincotta.
“Still, the Federal Reserve is widely expected to raise interest rates by 25 basis points next week, which some believe could be the last rate hike by the US central bank in the current hiking cycle, which has been the fastest monetary policy tightening cycle since the 1980s.”
Just after the market opened, the tech-laden Nasdaq was down 37 points or 0.3% at 12,015 points, the Dow Jones had slipped 45 points or 0.1% at 33,780 points and the S&P 500 was down 3 points or 0.1% at 4,133 points.
7:55am: Fed back in focus
Wall Street is likely to open down as strong tech-driven gains on Thursday fizzle out following mixed quarterly results from Amazon and as traders await key inflation data that is likely to influence the Federal Reserve’s decision on interest rates when the Federal Open Market Committee meets next week.
Futures for the Dow Jones Industrial Average shed 0.3% in Friday pre-market trading, while those for the broader S&P 500 index also fell 0.3% and contracts for the Nasdaq-100 lost 0.2%.
The main US benchmarks ended higher on Thursday, with a 14% rise in Meta Platforms’ share price supporting a 2.4% gain in the Nasdaq to 12,142, while the S&P 500 jumped 2% to 4,135 and the DJIA added 1.6% to 33,826 for its best trading day since January 6.
“US futures suggest Wall Street could give back some of those gains at the open stateside after Amazon’s cloud outlook disappointed,” commented Victoria Scholar, head of investment at interactive investor.
“After initially jumping 10% in the post-market session, Amazon fell over 2% after-hours following a mixed set of results. First-quarter group revenue hit $127.4 billion, outpacing analysts’ expectations. Advertising and Amazon Web Services also came in ahead of forecasts. However, it warned that cloud spending would slow in the current quarter amid ‘these tough economic conditions',” she added.
Investors will also parse the first-quarter employment cost index (ECI), coupled with the Fed’s favoured inflation metric, the Personal Consumer Expenditure (PCE) deflator data, due this morning, said TickMill Group market analyst Patrick Munnelly
“Markets are looking for 1.1% print for the ECI which would represent a decline on an annual comparison basis. PCE inflation is also pencilled to retreat in unison with CPI data as the energy input continues to be supportive of lower inflation figures,” Munnelly added. “Markets are expecting a decent pull back from the prior 5% print to something closer to 4%. However, the core number, excluding food and energy is expected to remain stubbornly elevated at the prior 4.6%.”