Markets Rebound Despite Disappointing GDP and Meta Reports

April 28, 2024

Markets Rebound Despite Disappointing GDP and Meta Reports – April 26 Market Recap

Indices

Dow 38,293, +253 or +0.66%.
Nasdaq 15,927, +645 or +4.22%.
MSCI EAFE 2275.32, +39.01 or +1.74%.
S&P 5,099, +132 or +2.66%.
USD10Y 4.669%, +5.4bp or +1.17%.
WTI Crude $83.67 bbl, +$0.97 or +1.17%.

The major indices all rebounded strongly this week despite economic releases and corporate earnings that presented a mixed picture of the U.S. economy. While jobless claims fell, signaling continued strength in the labor market, April’s Flash U.S. S&P Services PMI and Manufacturing PMI disappointed, suggesting potential challenges for the service and manufacturing sectors. Additionally, the unexpected slowdown in Q1 GDP growth raised concerns about the condition of the economy. On the inflation front, the April Headline and Core Personal Consumption Expenditure (PCE) Index remained in line with expectations, providing some reassurance against continued inflation fears.

Corporate earnings provided much of this week’s volatility. On Wednesday, post close, Meta (formerly Facebook) reported earnings and revenue results that beat estimates but guided Q2 revenues lower, resulting in a significant decline in its stock price and in the tech sector in general when the markets reopened the following day. However, on Friday, Alphabet (Google’s parent company), flipped the narrative, delivering strong earnings (post close on Thursday), surpassing expectations and even declaring its first dividend, leading to a notable rally in its stock price and leading a surge in the Communication Services and Tech sectors specifically and across all the indices in general.

This Week: April 29 – May 3

This week the U.S. markets are poised to be eventful, with a focus on key economic data releases, including the Federal Reserve Open Market Committee’s interest rate decision (no change in rates is expected) and subsequent press conference, the ISM Manufacturing survey, and the highly anticipated Non-Farm Payrolls, April Unemployment, and Average Hourly Wages reports on Friday. Investors will closely scrutinize these reports for insights into the health of the labor market and their implications for the anticipated but yet to be realized Fed rate cuts.

In the realm of corporate earnings, market participants will be eagerly awaiting reports from major companies across various sectors. Technology giants Amazon (AMZN) and Apple (AAPL) are scheduled to announce their earnings. Insight into the health of the American consumer will emerge with Mastercard (MA), Coca-Cola (KO), McDonalds (MCD), Starbucks (SBUX), Yum Brands (YUM), and DoorDash (DASH) all reporting. The crypto sector will also be represented with MicroStrategy (MSTR) and Coinbase (COIN) both on the docket.

Economic Calendar

Monday – N/A. Earnings: MicroStrategy (MSTR).
Tuesday – April Consumer Confidence. Earnings: Coca-Cola (KO), McDonalds (MCD), Sysco (SYY), Amazon (AMZN), Starbucks (SBUX).
Wednesday – April ADP Private Payrolls. April ISM Manufacturing, March Job Openings and Labor Turnover Survey (JOLTS), FOMC Interest Rate Decision. Earnings: Mastercard (MA), Yum Brands (YUM), DoorDash (DASH), Qualcomm (QCOM)
Thursday – Initial Jobless Claims. Earnings: Apple (AAPL), Coinbase (COIN).
Friday – April Non-Farm Payrolls, April Unemployment Report, April Average Hourly Earnings. Earnings: N/A.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Last Week‘s Daily Trading Recap…

Monday – Dow +253 to 38,239, Nasdaq +169 to 15,451, S&P +43 to 5,010, USD10Y +0.8bp to 4.623%.

All eleven S&P sectors traded higher today, led by Technology, Financials, and Utilities.

Tuesday – Dow +263 to 38,503, Nasdaq +245 to 15,696, S&P +60 to 5,070, USD10Y -5.2bp to 4.598%.

Ten of eleven S&P sectors traded higher today, led by Communication Services, Technology, and Industrials.
April Flash U.S. S&P Services PMI disappointed at 50.9 vs 52 expected and vs 51.7 last month.
April Flash U.S. S&P Manufacturing PMI was also light of expectations at 49.9 vs 52 and vs 51.9 last month.
Earnings: General Motors (GM) beat top and bottom-line expectations and raised their Q1 guidance; GM traded up +4.37%. Pepsi Co (PEP) beat both earnings and revenue estimates but is seeing weaker demand amid backlash to higher prices; PEP traded down -2.97%. Tesla (TSLA) missed on both earnings and revenues yet still traded higher on CEO Musk’s announcement of new models available by early 2025; TSLA jumped +13.3% post close. Visa (V) beat earnings and revenues and traded up +2.15% in the extended session.

Wednesday – Dow -42 to 38,460, Nasdaq +16 to 15,712, S&P +1 to 5,071, USD10Y +5.4bp to 4.652%.

Seven of eleven S&P sectors traded higher today, led by Consumer St, Real Estate, and Consumer Discretionary.
March Durable Goods Orders were in line at +2.6% vs last month’s +0.7% print.
Earnings: Boeing (BA) lost less than expected on better sales but burned through $4 billion in cash last quarter as deliveries slowed due to safety concerns; BA traded down -2.87%. Meta (META) beat their earnings and revenue estimates but guided Q2 revenues lower; META traded down -15.37% post close. Chipotle Mexican Grill (CMG) blew out their earnings estimates and beat their revenue estimates; CMG traded up +3.05% in the extended session. Ford Motor (F) beat on earnings, missed on revenues, maintained their forward guidance and traded up +2.39% after hours.

Thursday – Dow -375 to 38,085, Nasdaq -101 to 155,611, S&P -23 to 5,048, USD10Y +5.4bp to 4.706%.

Six of the eleven S&P sectors traded down today, led lower by Communication Services, Health Care, and Real Estate.
Jobless claims fell to 207,000 vs the 214,000 forecast and vs. last week’s unrevised print of 212,000.
Q1 GDP fell unexpectedly to a meager +1.6% annual growth rate. Expectations were at +2.2% vs +3.4% last quarter.
Earnings: American Airlines (AAL) lost more than expected on fewer revenues but guided the current quarter higher and maintained full year guidance; AAL traded up +1.51%. Caterpillar (CAT) missed their revenue estimates and guided current quarter revenues lower as well; CAT traded off -7.02%. Southwest Airlines (LUV) lost more on fewer than expected revenues and fell -6.96%. Microsoft (MSFT) beat both top and bottom-line estimates but issued soft fiscal Q4 revenue guidance; MSFT shares rose +4.43% post close. Alphabet (GOOGL) blew out its earnings expectations, beat on revenues, and declared their first dividend; GOOGL traded up +11.57% in the extended session.

Friday – Dow +153 to 38,239, Nasdaq +316 to 15,927, S&P +51 to 5,099, USD10Y -3.7bp to 4.669%.

Six of the eleven S&P sectors traded higher today, led by Communication Services, Technology, and Consumer Discretionary.
The April Headline Personal Consumption Expenditure (PCE) Index was in line with expectations at +0.3% and unchanged from March. Year-over-year PCE rose to +2.7% vs +2.6% expected and vs +2.5% last month.
April Core PCE was also in line with expectations at +0.3% and unchanged from March as well. Year-over-year Corre PCE was slightly higher that expectations at +2.8% vs +2.7% but unchanged vs last month.
Earnings: Chevron (CVX) beat their earnings estimates but missed on revenues. Exxon (XOM) missed their earnings estimates but beat on revenues. Both oil giants attributed their issues to lower refining margins and collapsing natural gas prices.

If you know of any friends or family members who could benefit from our services and these types of communiques, we are accepting new clients and offer a complimentary one-hour review.

Disclaimer: This is not a recommendation to buy or sell any of the securities listed above. I personally, or a family member whose account I control, have positions in the following securities/assets…Bitcoin, Cardano, Chainlink, Ethereum, ACHR, AVGO, BITB, ETHE and GBTC.