[New York Stock Market] Slightly Higher Amid Corporate Earnings Watch... Nasdaq Up 0.28%

The three major indices of the U.S. New York stock market closed slightly higher on Monday, the 17th (local time), amid concerns about tightening and with investors closely watching corporate earnings announcements.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 33,987.18, up 100.71 points (0.30%) from the previous session. The S&P 500, which focuses on large-cap stocks, rose 13.68 points (0.33%) to 4,151.32, while the tech-heavy Nasdaq index closed at 12,157.72, up 34.26 points (0.28%).

Among the S&P 500 sectors, nine out of twelve sectors rose, excluding energy, communication, and healthcare. In particular, real estate and financial stocks saw significant gains. By individual stocks, Google Alphabet fell 2.78% from the previous session following foreign media reports that Samsung Electronics might replace its smartphone search engine with Microsoft (MS) Bing. Moderna dropped more than 8% despite releasing positive results from cancer clinical trials. State Street fell more than 9% due to earnings below expectations. Charles Schwab, which had been rumored to be in crisis following the Silicon Valley Bank (SVB) bankruptcy, rose more than 2% after releasing its earnings that day. However, unlike the earnings that exceeded expectations, deposits were found to have decreased by 30% compared to the previous year.

[Image source=Reuters Yonhap News]

Investors are closely watching the earnings season, which began in earnest late last week with major banks such as JPMorgan, Citi, and Wells Fargo. Following Charles Schwab, this week will see earnings releases from Bank of America (BoA), Goldman Sachs, and BNY Mellon. While major banks have shown strong earnings, investors are focusing on the earnings of regional banks that have suffered deposit withdrawals since the SVB incident, as well as the size of loan loss provisions in the banking sector. Economic media CNBC reported, "Financial stocks are mixed during the earnings season," adding, "Investors are monitoring the overall health of the financial sector following the SVB collapse."

Among tech companies, Tesla, Netflix, and IBM are scheduled to announce earnings soon. According to BoA, 90% of companies that reported earnings last week posted earnings per share (EPS) that exceeded expectations. With recent indicators such as employment, inflation, and consumption repeatedly falling short of market forecasts, emphasizing a slowing economy, the second-quarter earnings guidance from companies is also noteworthy.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear gauge," fell to the 16 level that day. Michael Pervas of Toll Brothers commented, "This suggests that investors are not concerned about systemic problems in banks," and added, "Rather, they are focusing on earnings."

The Federal Reserve's Beige Book, a report on economic conditions, will be released on the 19th. It will be crucial to see how the Beige Book assesses economic conditions, including banking sector instability caused by the SVB incident. Fed officials scheduled to speak include Michelle Bowman, Fed Governor; John Williams, President of the New York Fed; Christopher Waller, Fed Governor; Loretta Mester, President of the Cleveland Fed; Raphael Bostic, President of the Atlanta Fed; Patrick Harker, President of the Philadelphia Fed; and Lisa Cook, Fed Governor.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market currently reflects an over 86% probability that the Fed will raise the benchmark interest rate by 0.25 percentage points in May, a so-called "baby step." The probability of a rate hold stands at around 13%. Despite slowing economic indicators, expectations are growing that the Fed will prolong additional tightening to reduce inflation, with further hikes anticipated in June. Sam Stovall, Chief Investment Strategist at CFRA Research, said, "There is a tug-of-war between those optimistic that the Fed will soon end rate hikes and those who believe hikes are still necessary," adding, "In some ways, this is because the economy is not slowing."

The indicators released that day were positive. The Empire State Manufacturing Index for April, which reflects manufacturing activity in New York State, turned positive at 10.8, up from -24.6 the previous month. This far exceeded market expectations of -15. Investors are also paying attention to economic data from China, which will be released the following day.

In the New York bond market, U.S. Treasury yields rose slightly. The 10-year U.S. Treasury yield hovered around 3.59%, while the 2-year yield, sensitive to monetary policy, was around 4.19%. The Dollar Index, which shows the value of the dollar against six major currencies, rose more than 0.5% from the previous session to around 102.

International oil prices fell slightly. On the New York Mercantile Exchange, the May delivery West Texas Intermediate (WTI) crude oil price closed at $80.83 per barrel, up $1.69 (2.05%) from the previous day. This closing price was the lowest since April 10.