[Chart courtesy of MarketWatch.com]

1. Moving the markets

Today’s stock market presented a dynamic landscape, with investors casting their gaze forward to upcoming corporate earnings and a pivotal labor report due later in the week.

Amidst this anticipation, the market witnessed a diverse range of earnings outcomes. Qualcomm, the semiconductor giant, saw its shares climb by 9% following the announcement of earnings that surpassed expectations, coupled with a robust revenue forecast. Conversely, DoorDash experienced a 13% decline in its share price after its loss per share exceeded the projections set by analysts. In a remarkable turn of events, Carvana’s shares skyrocketed by 34%, buoyed by the company’s announcement of record-breaking earnings after Wednesday’s closing bell.

These fluctuations came on the heels of a tumultuous day on Wall Street, where investor sentiment was influenced by the Federal Reserve’s decision to maintain the status quo on interest rates.

Jerome Powell, the Fed Chair, in his press briefing, virtually eliminated the possibility of an interest rate hike as the Fed’s forthcoming action. This stance appeared to provide temporary relief to the markets. However, with persistent inflation showing no signs of abatement, Powell’s cautious remarks can be likened to a balancing act on a precarious tightrope.

In the realm of technology, U.S. equities halted their two-day downturn as tech stocks experienced a surge in the latter part of the trading session. The focus of Wall Street has now shifted to Apple’s post-market earnings announcement.

There is a buzz among some analysts who predict that Apple may unveil a significant stock repurchase scheme to counterbalance what could be an underwhelming earnings report. This speculation arises amidst a backdrop of numerous research reports over recent months that suggest a decline in iPhone sales internationally.

In the broader financial landscape, bond yields continued their descent for a second consecutive day. Gold prices remained relatively stable, while Bitcoin ETFs enjoyed a notable increase of nearly 4.5%. The S&P 500 index made headway but found itself wedged between its 50-day and 100-day moving averages.

As we stand at this crossroads, one can’t help but ponder: With such a confluence of factors at play, which direction will the S&P 500 take from here?

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

As April ended, the major stock indexes concluded the month on a downward trajectory, spurred by wage data that surpassed expectations and reignited concerns about inflation. This comes just before the Federal Reserve’s impending interest rate decision.

The employment cost index, which tracks wages and benefits, rose by 1.2% in the March quarter, exceeding the predicted 1%. This news prompted a surge in Treasury yields, with the 2-year yield surpassing and holding the 5% threshold for the first time.

Despite these figures, Wall Street remains unconvinced that the Federal Reserve will shift its current stance of not rushing to ease monetary policy. Similarly, the data does not seem to be compelling enough to prompt an immediate increase in interest rates. Traders continue to anticipate a modest rate cut of one quarter percentage point in 2024, even as persistent inflation and a robust economy suggest that the Fed may maintain higher rates for an extended period.

The central bank is widely expected to maintain the current interest rates, but there is growing concern that Jerome Powell, the Fed Chair, may express a more hawkish outlook in his comments following the meeting, especially considering recent reports indicating rising inflation.

The trading day was marred by a series of negative economic indicators: Case-Shiller home prices surged unexpectedly, consumer confidence plummeted, and the Dallas Fed Services index fell sharply.

The markets floundered, with stocks, bonds, crude oil, and Bitcoin all weakening as the month concluded. However, the dollar experienced a rally. Gold, despite suffering losses on the day, managed to post solid gains for the month.

April marked the first month of losses for stocks since the Federal Reserve’s policy shift in October 2023. It was the most challenging month for the Dow Jones Industrial Average since September 2022, and the Nasdaq experienced its most significant monthly decline since September 2023.

The group of MAG 7 stocks, which includes some of the largest tech companies, also ended the month in the red, recording their first monthly loss since October and their worst performance since September.

Given the current economic landscape, I can’t help but wonder:

When will the Nasdaq align with the lowered expectations for rate cuts?

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[Chart courtesy of MarketWatch.com]

1. Moving the markets

[Chart courtesy of MarketWatch.com]

In today’s market session, traders witnessed a cautious upward trajectory with a hint of optimism. The major indexes, guided by selected mega-cap technology stocks, edged higher. However, beneath the surface, conflicting forces played out.

Tesla, the electric vehicle giant, surged nearly 11% after overcoming a significant regulatory hurdle related to its full self-driving technology in China. Meanwhile, Apple enjoyed a more than 3% boost following a bullish upgrade from investment firm Bernstein. However, other tech heavyweights—Microsoft, Alphabet, Meta, and Nvidia—struggled and traded lower.

The ongoing earnings season paints a mixed picture. Of the S&P 500-listed firms that have reported results so far, approximately 80% have surpassed expectations. This positive trend underscores the resilience of corporate America amid economic challenges.

Today’s action provided a reprieve from the recent market downtrend, yet it was marked by choppiness. The broad S&P 500 and tech-heavy Nasdaq are both poised to end April down more than 2%, while the blue-chip Dow faces a potential slide of over 3%. Investors remain cautiously optimistic, balancing short-term volatility with long-term prospects.

Later this week, all eyes will be on the Federal Reserve’s latest interest rate announcement, scheduled for Wednesday. While the central bank is widely expected to maintain borrowing costs unchanged, traders eagerly await Chair Jerome Powell’s post-announcement press conference. Will the Fed’s communication provide clarity on inflation concerns and the path forward?

Bond yields experienced a knee-jerk reaction, remaining below Friday’s close. The dollar initially bounced but ultimately retreated during the session. Gold maintained a quiet stance, treading water. Crude oil not only lost momentum but also dipped below the $83 mark. Bitcoin drifted lower but found support around $62,000.

As financial conditions ease once again, I wonder:

Will the Fed introduce any surprises on Wednesday? Inflation remains a persistent concern, and the central bank’s stance could sway market sentiment.

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