Short On Time: Executive Summary
Earnings season continues on a strong note. This week, another 126 companies are set to report. So far, 317 firms—representing 63% of the S&P 500—have released results, and the picture is impressive: 86% have beaten earnings estimates by a median of 6%, while the few that missed did so by a relatively modest 3%. Revenue results are similarly solid, with 80% of companies surpassing top-line expectations by a median of 3%. Looking ahead, forward guidance will take center stage. Investors will be listening closely for commentary on tariffs, inflation, consumer spending, AI capital spending, and margins. While strong beat rates are fairly common—companies tend to guide conservatively—the size and breadth of the surprises this quarter stand out as particularly encouraging for the market.
Hopefully, it isn’t the case, but keep in mind we are still in the midst of a mid-term election year, so we aren’t out of the woods. Some back-and-forth volatility through the summer would not be unheard of. Oh, and Happy Star Wars Day! May the 4th be with you!
The Week On Wall Street
Stocks advanced last week as investors moved past stalled progress in Middle East peace talks and refocused on corporate earnings. The Standard & Poor’s 500 Index rose 0.91 percent, while the Nasdaq Composite Index climbed 1.12 percent. The Dow Jones Industrial Average moved up 0.55 percent. The MSCI EAFE Index, which tracks developed overseas stock markets, added 0.58 percent.
April: Best Month in Five Years for S&P, Nasdaq
Markets were under pressure early in the week as investors focused on stalled peace talks and rising oil prices. But midweek, momentum shifted. First, the Fed announced it was holding interest rates steady, as expected, but there was some dissent over the decision. Then investors' attention focused on Wednesday’s closing bell, when several big-name companies reported Q1 results. Investors mostly liked what they heard, and stock prices rose, ending April on a high note. The Dow led the broad market rally while the S&P 500 and Nasdaq each logged their best monthly performances in 5 years. Stocks rose again on Friday as oil prices fell. Investors applauded Q1 results from another high-profile megacap tech company, which helped the S&P notch another all-time intraday high.
Fed News
The Federal Reserve voted 8-4 to keep interest rates steady at the April meeting, leaving the Federal Funds Rate at a 3.5 to 3.75 percent target range. Market observers were quick to point out that the 8-4 decision was the Federal Open Market Committee’s most divided vote since 1992. At the last FOMC press conference of his eight-year tenure, Fed Chair Powell announced he would stay on as a Fed governor after his term as Chair expires on May 15. Earlier that day, the Senate Banking Committee confirmed Kevin Warsh as the next Fed Chair, setting up a final confirmation vote in the Senate.
This Week: Key Economic Data
Monday: New York Fed President John Williams speaks.
Tuesday: Trade Balance. Job Openings. New Home Sales (Feb* + March). ISM Services. Federal Reserve speeches: Michelle Bowman, Michael Barr.
Wednesday: ADP Employment Report. Chicago Fed President Austan Goolsbee speaks.
Thursday: Weekly Jobless Claims. Productivity. Construction Spending (Feb* + March). Consumer Credit. Federal Reserve speeches: Neel Kashkari, John Williams.
Friday: Fed governor Lisa Cook speaks. U.S. Employment Report. Wholesale Inventories. Consumer Sentiment. Fed panel: Chicago Fed President Austan Goolsbee, San Francisco Fed President Mary Daly, Fed governors Michelle Bowman and Christopher Waller.
This Week: Notable Companies Reporting Earnings
Stay tuned...
