Everything to Know about Macro and Markets
All main stock indexes and all 11 of the S&P 500 (SPX) sectors surged on Friday, pulling the markets higher for the week. The two back-to-back weekly increases helped stocks recover much of the ground lost during three weekly declines in April.
The Fed Rollercoaster
The S&P 500 lost over 4% last month, its first drop after a five-month rally, with Utilities the only sector to produce positive results in April. Worries about resurging inflation gave rise to speculations that the Federal Reserve might return to a policy of monetary tightening, which weighed down stock performance. This added to investors’ uneasiness about stocks’ overstretched valuations.
Investor anxiety was palpable ahead of the Federal Open Market Committee (FOMC) meeting on Wednesday, swinging in opposite directions. Though Fed Chair Jerome Powell did move from “when” to “if” about the prospect of the rate cuts this year, he strongly pushed back against the possibility of a rate hike. With the “higher for longer” doctrine having already sunk in, markets breathed out a sigh of relief upon hearing the news.
Powell also reiterated that the central bank remains data-dependent, continuing to closely follow the incoming economic reports for input into their policy decisions. So, when Friday’s labor-market report came out “just right”, showing weaker-than-expected job gains and easing wage growth, investors interpreted it as a sign that rate cuts are still on the table for 2024.
An Apple a Day
Markets were also propped up by strong earnings reports, particularly the one from Apple (AAPL), the last member of the Magnificent Seven group to release its results this season. The consumer electronics behemoth reported stronger-than-expected quarterly results, and also announced that it will repurchase $110 billion in shares, the largest-ever buyback for any company.
Overall, this is turning out to be a strong earnings season. With 80% of the S&P 500 having reported actual results for Q1 2024, 77% have exceeded EPS expectations. At the moment, the blended results (actual and estimated results combined) stand at a 5% earnings growth year-on-year. If this rate is sustained through the remaining reports, this would mark the fastest earnings growth since Q2 2022.
Notable Stock News
¤ Amgen (AMGN) saw its stock surge almost 12% after the biotechnology company topped analysts’ EPS…
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