Last week, the stock market witnessed a series of unexpected turns that culminated in significant gains for major indices and leading companies. Despite a lackluster job growth report for April, indicating a slowdown from March’s surge, the financial stock markets responded positively. Investors seemed to find solace in the underwhelming data, perhaps interpreting it as a sign that the Federal Reserve might hold back on any impending interest rate hikes.
Stock Market: Tech Giants Lead the Charge
Among the standout performers in the stock market, Apple (AAPL) saw its shares soar by 6% on Friday alone, ending the week with an impressive 8.3% gain. This rally was sparked by its second-quarter earnings, which, while not spectacular, were better than many feared.
Similarly, Tesla (TSLA) and Amazon.com (AMZN) made notable advances, rising 7.7% and 3.7% respectively over the week. Even Meta Platforms (META), despite broader sector challenges, managed to increase nearly 2%.
The broader indices also reflected this upward trajectory of the financial stock market. The Standard & Poor’s 500 Index ticked up by 0.6%, while the Nasdaq composite outperformed with a 1.4% rise, building on the previous week’s 4.2% gain. The Dow Jones Industrial Average wasn’t left behind, climbing 1.1% and marking its third consecutive week of gains.
Jerome Powell’s Reassurance Sparks Optimism
A significant factor in the market’s rally was a statement from Federal Reserve Chairman Jerome Powell. During a news conference, Powell indicated that an interest rate hike was unlikely in the near term.
This assertion seemed to alleviate some of the market’s apprehensions, leading to a robust rally that continued through the end of the week.
Interest Rates and Oil Prices Provide Relief
Further boosting investor sentiment, the week saw a general decline in key interest rates and oil prices. The 10-year Treasury yield dipped slightly, which in turn, helped reduce mortgage rates.
This was a welcome change for prospective home buyers facing higher borrowing costs over the past months. Additionally, crude oil prices fell below $80 for the third consecutive day, a relief given their prolonged period above this level.
Throw me your thoughts of Bob Iger's leadership at Disney. pic.twitter.com/55eKH3eNZT
— Mike Zeroh (@MIKEZEROH1) May 5, 2024
A Look Ahead: Major Earnings on the Horizon
As the first-quarter earnings season continues, all eyes are on several heavyweight companies slated to report their results. Notably, Disney (DIS) is expected to release its second-quarter earnings before Tuesday’s market opening.
The entertainment giant is anticipated to surpass its performance from a year ago, though expectations are tempered compared to its first-quarter results. Other key earnings include Uber (UBER), which is projected to show improved profitability as the ride-sharing industry recovers from pandemic lows.
Toyota (TM) and Rivian Automotive (RIVN) are also on deck, with investors keenly watching the latter to gauge its forward-looking viability amid a challenging market for electric vehicles.
A Tentative Optimism
The coming week does not have major economic reports scheduled, but speeches from Federal Reserve officials, including Neel Kashkari, will be closely monitored. These discussions may further influence market sentiment, especially regarding interest rate expectations and inflation.
In summary, while the stock market ended April on a somewhat somber note, the rebound observed last week, bolstered by strong performances from tech giants and soothing words from Jerome Powell, sets a cautiously optimistic tone for May.
As investors look forward to a potentially robust earnings week, the hope is that this positive momentum will continue, underscored by strategic corporate performances and stable economic indicators.
