Stocks finished higher Monday, snapping the longest losing streak in more than eighteen months, as Wall Street headed into one of the busiest earnings weeks of the year.
The Dow Jones Industrial Average rose 253 points, or 0.67%, to 38,239.98, while the S&P 500, gained 43 points, or 0.87%, to 5,010.60, and the tech-heavy Nasdaq surged 169.30, or 1.11%, to 15,451.31.
Both the S&P 500 and Nasdaq ended a six-day losing streak. Tech superstar Nvidia bounced back from last week's sell-off to finish up 4.35%.
Last week, according to Chris Fasciano, portfolio manager at Commonwealth Financial Network, "was a tough week for equity investors led by declines in the Nasdaq and broad-based sell-off in technology stocks."
"But as we turn our attention to this week, it is peak earnings season, and we will hear from a large swath of companies," he said. "But for better or for worse, it is tech earnings week with Microsoft, Meta and Google being the headliners."
Fasciano said these earnings reports are likely to determine whether the tech sell-off ends or continues, "or perhaps we continue to see investors differentiate between the growth outlooks for some of these high-profile growth companies that have led the market over the last couple of years. "
"Equity investors are going to be really busy this week after last week," he added.
Updated at 1:30 PM EDT
Ford tough
Ford Motor (F) shares are one of the biggest S&P 500 gainers Monday, rising 5.2% to $12.77 per share ahead of the carmaker's first quarter earnings later this week.
Ford, which has forecast core profits in the region of $10 billion to $12 billion for this year, a modest increase from 2023 levels, has vowed to slow the pace of its EV expansion while focusing on combustion-engine sales growth.
Analysts see the group posting first quarter earnings of 42 cents per share, down 33% from last year, on revenues of around $40.14 billion.
Updated at 10:53 AM EDT
Eyes on the yields
Treasury yields are easing into the morning session, but that's not providing much of a support for stocks, with early gains fading and the S&P 500 holding onto a 0.24% advance.
Benchmark 2-year notes have slipped to 4.958%, a 3 basis point decline from overnight levels, with 10-year notes also falling 3 basis points to 4.621%.
The 10-year yield was 3.78% in late December. As this story notes, it hit 4.70% last week, almost a 100 basis point rise in four months.
— Jim Bianco (@biancoresearch) April 22, 2024
The story asks if the 10-year yield can hit 5% as if this were a bold call. It's not.
Saying the 10-year will NOT hit 5%, or the yield rise…
Updated at 9:45 AM EDT
Solid open
The S&P 500 clawed back around 20 points from last week's slump in the opening minutes of trading, rising 0.41% from Friday's closing levels on the back of solid gains from Big Tech names like Microsoft, Apple and Nvidia.
The Dow edged only 25 points higher, however, following a much-stronger premarket session while the Nasdaq rose 97 points, or 0.62%.
"Concerns about rising interest rates, stubborn inflation, and geopolitical risks aren’t going anywhere, but this week the tech sector may be calling the shots. Last week tech selling fueled the S&P 500’s biggest down week since October," said Chris Larkin, managing director for trading and investing at E*Trade from Morgan Stanley.
"And even though we’ll get a first look at Q1 GDP and the Fed’s preferred inflation gauge this week, Big Tech earnings may determine whether the stock market avoids its first four-week losing streak in two years," he added.
S&P 500 Opening Bell Heatmap (April 22, 2024)$SPY +0.50% 🟩$QQQ +0.68% 🟩$DJI +0.25% 🟩$IWM +0.15% 🟩 pic.twitter.com/qlFndMkQsf
— Wall St Engine (@wallstengine) April 22, 2024
Updated at 9:19 AM EDT
Tesla tumult
Tesla (TSLA) shares are set to open at the lowest levels in more than fifteen months Monday as analyst and investors brace for a difficult first quarter earnings report later this week following another round of EV price cuts that included a 30% reduction in the cost of an FSD software subscription.
Tesla shares were marked 4.4% lower in premarket trading to indicate an opening bell price of $140.50 each.
Related: Tesla crash continues as Musk doubles down on 'blindingly obvious' strategy
Stock Market Today
Stocks closed firmly lower on Friday, extending the S&P 500's run of losses to a sixth consecutive session, the longest since October 2022 and a slump that marks a 5.5% drawdown from the start of the second quarter.
A quiet weekend in the Middle East, however, as well as the passage of a contentious Ukraine aid package has soothed some of the market's geopolitical concerns while Treasury bond yields appear to have matched recent gains amid a repricing of interest rate forecasts from the Federal Reserve.
Benchmark 2-year Treasury note yields, however, are holding at just under 5%, a level that is more than triple the S&P 500 dividend yield and likely to tempt investors with a risk-free return in the face of the recent market pullback.
That rotation will likely face a series of tests this week with around 160 S&P 500 companies reporting first quarter earnings this week, including market heavyweights Tesla (TSLA) , Alphabet (GOOG) and Microsoft (MSFT) .
LSEG data suggest that collective S&P 500 first-quarter profits will rise 2.9% from a year earlier to a share-weighted $447.9 billion, with that rate improving to 10.7% over the three months ending in June.
Investors will also need to navigate the first estimate of first quarter GDP, due April 25, as well as a March reading of the Fed's preferred inflation gauge, the PCE price index, due the following day.
Related: Wall Street faces make-or-break week with Tesla, GDP, inflation on deck
"With markets — by most technical metrics — oversold and due for a bounce, next week’s tech-earnings reports coupled with a key inflation report could provide the catalysts markets need for a rally," said LPL Financial's chief global strategist, Qunicy Krosby.
"As events in the Middle East appear to have subsided, at the margin at least, traders and investors will be able to focus on the path of inflation with the PCE, especially with more Fed speakers acknowledging that the pace of disinflation has stalled," she added.
Markets remain on edge following last week's slump, however, with the CBOE's VIX index holding at around $18.53 in overnight dealing, a level suggests traders are expecting daily price swings of around 1.15%, or 57 points, for the S&P 500 over the next month.
Related: Got stocks? Don't panic
However, heading into the start of the April 22 trading day on Wall Street, stock futures are looking at a firm start to the week, with contracts tied to the S&P 500 suggesting a 28 point opening bell gain, a move that would take the benchmark back closer to the 5,000-point mark.
Futures tied to the Dow Jones Industrial Average, meanwhile, are priced for a 233 point advance and those linked to the tech-focused Nasdaq are indicating a 100 point gain.
More Wall Street Analysts:
- Analyst unveils new Nike price target ahead of big summer for sports
- Analysts weigh in on Google-parent Alphabet’s stock after cloud event
- Analysts revamp Disney stock price target after proxy fight
In overseas markets, Europe's Stoxx 600 was marked 0.5% higher in early Frankfurt trading ahead of a busy earnings week, which includes Q1 updates from 173 companies, including some of the region's biggest banks.
Overnight in Asia, the Nikkei 225 was marked 1% higher by the close of trading in Tokyo, while the regionwide MSCI ex-Japan index gained 0.91% into the close of trading.
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