Weekly review
This week, the stock market didn't show significant movement, with the S&P 500 closing at 4,133, down from 4,137 last Friday. Investors are waiting for next week's earnings reports from major companies such as Microsoft, Amazon.com, Alphabet, and Meta Platforms. Tesla's disappointing Q1 results caused a nearly 10% plunge on Thursday, while Procter & Gamble rose 3.5% on Friday after reporting positive fiscal Q3 results. Bank stocks were weak, but the financial sector still gained 1.0%. Real estate, consumer staples, and utilities were the top-performing sectors, while communication services and energy were the worst. Weak economic data caused a hesitant mindset, with continuing jobless claims, the Philadelphia Fed Index, the U.S. Leading Economic Index, and existing home sales all showing declines. Fed officials made comments suggesting that rates may need to rise further, while the fed funds futures market is predicting two rate cuts by year-end. Oil prices fell by 5.5%, while natural gas futures rose by 5.0%. The 2-yr Treasury note yield increased by six basis points to 4.16%, and the 10-yr note yield rose by five basis points to 3.57%.
On Monday, the stock market had a narrow range of oscillation with modest losses for the Dow, Nasdaq, and S&P 500. Investors were hesitant due to upcoming earnings news, although results have been better than anticipated. However, market valuation concerns prevented significant upward movement. Late in the day, the market saw a rebound effort and logged modest gains, thanks to a tweet from a CNN reporter that House Speaker McCarthy had the votes needed to raise the debt ceiling. Major indices finished the day at their best levels, leaving the S&P 500 just above 4,150. The PHLX Semiconductor Index (SOX) closed with a modest 0.1% loss, while Treasuries settled with losses across the curve.
On Tuesday, the main indices had a lackluster showing, trading mostly around their flat lines. Investors were reacting to earnings news, positive economic data, and commentary from some Fed officials. Bank of America (BAC) and Lockheed Martin (LMT) were among the influential winners due to better-than-expected Q1 earnings, while Johnson & Johnson (JNJ) and Goldman Sachs (GS) registered outsized losses despite reporting better-than-expected Q1 earnings. Homebuilders were a pocket of strength after the morning's better-than-expected housing starts data from March. Total housing starts declined, but single-unit starts were up and single-family permits increased, indicating growth in single-family housing construction.
On Wednesday, the stock market had a lackluster showing with major indices trading within narrow ranges, reflecting a wait-and-see mindset ahead of earnings reports from most mega cap stocks and Tesla. The market had a negative bias initially, but several mega cap stocks recovered from early weakness and boosted index performance. However, outsized moves were mostly reserved for stocks with specific catalysts, and treasury yields rose, acting as a headwind for equities.
On Thursday, the stock market had a mostly negative disposition, digesting a slate of weak economic data and disappointing earnings results from Tesla. Bank stocks were a big drag on the broader market Thursday following several earnings misses from regional banks. Despite the headwinds, some relative strength from other mega cap names helped spur a rebound effort from opening declines for the major indices, which traded right around their flat lines before selling picked up around 2:00 p.m. ET. Homebuilders were big outperformers Thursday, following a positive response to D.R. Horton's impressive quarterly results and outlook.
On Friday's options expiration day, major indices experienced a small gain, but it was not a remarkable achievement. The market was relatively stable throughout the day, with investors waiting for earnings reports from several mega caps scheduled for next week. Some individual stocks, such as Procter & Gamble and HCA, showed significant movements after reporting favorable earnings. Bank stocks, on the other hand, remained under pressure following disappointing earnings from Regions Financial, leading to a decline in SPDR Regional Bank ETF and SPDR Bank ETF. The materials sector witnessed the most significant drop on Friday due to a loss in Freeport McMoRan after its earnings report and Albemarle in response to reports that Chile plans to nationalize its lithium industry. The economic data released on Friday includes April's IHS Markit Manufacturing PMI and Services PMI, which showed improvement from the previous month's figures.