The major U.S. indices exhibited varied performances on Wednesday. The Dow Jones Industrial Average declined slightly by 0.1%, while the S&P 500 and Nasdaq witnessed modest growth of 0.02% and 0.1%, respectively. Among the notable stock movements, Tesla shares surged 12.06% following its quarterly report. Meta Platforms, Snap, Amazon, and IBM also experienced price fluctuations, with Meta and Snap closing down, and Amazon and IBM ending the day with gains.
The Communication Services sector within the S&P 500 experienced a mixed bag of performances, with some companies posting significant gains and others facing losses. Chicken Soup for the Soul Entertainment led the gainers with an impressive 155% surge, while Direct Digital Holdings suffered the largest decline at 14%. Other notable performers among the gainers include Ribbon Communications (+28%), Bilibili (+11%), iClick Interactive Asia Group (+10%), and Trump Media & Technology Group (+9%). In contrast, Dolphin Entertainment (-9%), Kuke Music Holding (-9%), Travelzoo (-8%), and Spotify Technology S.A. (-7%) faced setbacks. The sector was largely influenced by the performance of its various sub-sectors, with Telecommunication Services showing a 0.5% gain while Media & Entertainment declined by 0.6%.
U.S. stock markets opened with mixed results on Wednesday as concerns about prolonged high interest rates overshadowed positive earnings reports. The Dow Jones Industrial Average and the S&P 500 remained largely flat, while the technology-heavy Nasdaq Composite gained slightly. Despite strong earnings releases from companies such as Tesla, Hasbro, and Visa, investors remained cautious due to rising treasury yields and the potential for a pullback if upcoming economic data leads to reduced interest rate cut expectations.
Wall Street partially recovered on Wednesday, with Tesla’s post-earnings gain and other heavyweight earnings reports influencing market sentiment. The Nasdaq Composite and S&P 500 gained modestly, while the Dow Jones Industrial Average edged higher. Industrial stocks fell, dragged down by transportation and defense sectors. Treasury yields rose, putting pressure on equities. Investors await Meta Platforms’ earnings results after the closing bell.
On Tuesday, the U.S. stock markets experienced a surge in gains. The Nasdaq led the rise, jumping by 1.5%, followed by the S&P 500 with a 1.2% increase. Tesla’s upcoming earnings report garnered significant attention, as it holds considerable influence on the S&P 500’s performance.
The Nasdaq and S&P 500 enjoyed gains on Wednesday after Tuesday’s earnings, while the Dow Jones slipped. Tesla Inc soared despite muted demand, while Boeing Co climbed despite a first-quarter loss. Alphabet Inc and Ford Motor Co were among other big names set to report on Wednesday. Tesla Inc emerged as one of Wednesday’s big risers, up 12.1% in pre-market trading after Tuesday’s earnings.
JPMorgan analysts have identified an attractive set-up for the S&P 500, based on their US Tactical Positioning Monitor, which triggered a level similar to late August and late October 2023 lows. Historically, when the indicator has reached this level, the US equity benchmark has gained approximately 3% within the following 20 days. The analysts anticipate the tactical bounce to continue, citing upcoming megacap tech earnings and PCE releases as key factors. They suggest that the market may overshoot to the upside if these releases are favorable, with tech and value stocks leading the surge, and artificial intelligence trades resuming.
Futures contracts for the S&P 500 and Nasdaq gained traction on Wednesday, buoyed by a resurgence in growth stocks. Investors cheered upbeat earnings from Tesla and eagerly anticipated economic data later this week that could provide insights into the Federal Reserve’s interest rate trajectory.
Tesla emerged as a standout, with a remarkable 9.9% pre-market jump in share prices following the electric vehicle manufacturer’s plans to introduce affordable models. Other electric vehicle stocks joined the rally, with Lucid Group, Nikola, and Nio witnessing gains ranging from 1.2% to 3.7%.
Other growth stocks experienced upward momentum, including Amazon.com, Microsoft, and Nvidia, which rose by 0.3% to 1.6%. Meta Platforms and Snap also made notable gains of 1.7% and 2.1%, respectively, following the US Senate’s approval of a bill that could potentially ban TikTok in the United States if its Chinese parent company, ByteDance, fails to divest the short video platform.
US equities appear to have rebounded from last week’s decline, which was attributed to geopolitical tensions in the Middle East and revised expectations for Federal Reserve rate cuts.
The corporate earnings season is gaining momentum, with analysts projecting a 6% annual growth in adjusted blended earnings for the quarter, according to LSEG data. Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, highlighted the significance of the substantial volume of company results this week, stating that it provides investors with a wider focus beyond macroeconomic events and contributes to the increased market activity.
Market participants are keenly awaiting the release of the Personal Consumption Expenditures (PCE) index for March, the Fed’s preferred inflation measure, on Friday, to gauge the likelihood of interest rate cuts this year. Money markets currently anticipate approximately 41 basis points of cuts in 2022, a downward revision from the 150 bps projected earlier this year, based on LSEG data.
The economic calendar for the day includes the release of durable goods data for March at 8:30 a.m. ET. Pre-market trading witnessed Visa soaring by 2.8% after the payment processing giant surpassed Wall Street estimates in its second-quarter results, indicating that consumers remain resilient despite concerns about economic slowdown. Texas Instruments also climbed 7.3% after the chipmaker’s positive second-quarter revenue forecast, suggesting growing demand for its analog semiconductors. Arm Holdings, Micron Technology, and Advanced Micro Devices also experienced gains, ranging from 1.4% to 3.6%, reflecting the positive sentiment surrounding chip stocks.
S&P 500 and Nasdaq futures surged on Wednesday, fueled by strong earnings from Tesla and anticipation of upcoming economic data. Megacap stocks led the rally, with Tesla soaring 9.9% premarket after announcing plans for affordable models. Other growth stocks, including Amazon, Microsoft, and Meta Platforms, also advanced significantly. The US Senate’s passage of a bill potentially banning TikTok contributed to gains in Meta and Snap. Corporate earnings season is in full swing, with Meta, Microsoft, and Alphabet among those slated to report this week. The Personal Consumption Expenditures (PCE) index, the Fed’s preferred inflation gauge, is expected to be released on Friday, providing insights into the central bank’s interest rate policy. Visa and Texas Instruments also reported strong results, boosting their stock prices. Chip stocks like Arm Holdings and Micron Technology also benefited from the positive sentiment.
The U.S. stock market made a strong start to 2024, with the S&P 500 index rising 10.6% in the first quarter. This marked the index’s best first-quarter performance since 2019. The rally was driven by expectations that the Federal Reserve would cut interest rates by March 2024, but those expectations have since been halved to possibly three cuts, with June now being the anticipated start date.
While the market has remained resilient, inflation has remained a concern, leading to a resetting of the benchmark 10-year U.S. Treasury yield from below 4% to 4.2% by the end of the quarter. Bonds enjoyed the decline in rates into the end of 2023, but the resetting of rate cut expectations has taken the broad bond market down -0.8% year-to-date.
Despite the challenges, cyclical stocks, led by the energy sector, surged in March, broadening the U.S. stock market beyond the seven dominant stocks that had led the rally. However, from a size standpoint, large caps remained the preferred choice, with mid and small caps lagging.
