[New York Stock Market] Mixed Close Awaiting Big Tech Earnings... Nasdaq Down 0.29%

The three major indices of the U.S. New York stock market closed mixed and near flat on Monday, the 24th (local time), as investors awaited the upcoming earnings reports from big tech companies and economic indicators scheduled for this week. This week, leading big tech companies such as Microsoft (MS), Amazon, Google Alphabet, and Meta Platforms are set to release their earnings one after another. The March Personal Consumption Expenditures (PCE) price index, a preferred inflation gauge of the Federal Reserve (Fed), along with growth rate data, is also scheduled for release.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,875.40, up 66.44 points (0.2%) from the previous session. The large-cap focused S&P 500 index rose 3.52 points (0.09%) to 4,137.04. In contrast, the tech-heavy Nasdaq index fell 35.25 points (0.29%) to close at 12,037.20.

Within the S&P 500, energy, healthcare, materials, and utilities sectors rose, while technology, real estate, and financial sectors declined. Energy stocks gained more than 1.5%, buoyed by rising international oil prices. Among individual stocks, Bed Bath & Beyond, which filed for bankruptcy the previous day, plunged more than 35% from the previous close. Coca-Cola closed slightly down despite first-quarter earnings that exceeded Wall Street expectations. First Republic, which has been engulfed in crisis rumors since the Silicon Valley Bank (SVB) incident, jumped more than 12% during regular trading ahead of its earnings release after the market close. Among other major tech stocks awaiting earnings announcements, MS (-1.40%) and Amazon (-0.70%) saw their stock prices decline. Alphabet closed slightly higher.

[Image source=Reuters Yonhap News]

Investors are closely watching the flood of major corporate earnings and economic data this week. Not only the major big tech companies but also about one-third of the S&P 500-listed companies will release their earnings in large numbers. Alphabet, Google's parent company, and MS are both scheduled to announce their first-quarter earnings on the 25th. Meta Platforms, Facebook's parent company, is set to report on the 26th, and Amazon on the 27th. McDonald's, Visa, Verizon, General Motors, Boeing, ExxonMobil, Chevron, and others are also on standby. Following First Republic Bank, earnings from regional U.S. banks such as PacWest Bancorp, UMB Financial, and NY Community Bancorp are also expected to be released consecutively.

Since last week's strong earnings from major banks drove the New York stock market, this week’s earnings and future outlook, centered on big tech, are expected to guide the market direction. According to FactSet, as of this morning, 76% of the S&P 500 companies that have reported earnings exceeded expected earnings per share (EPS). However, according to Refinitiv, the overall net profit of S&P 500 companies for the first quarter is expected to decline by 5.2%.

Chris Harvey, Head of Equity Strategy at Wells Fargo Securities, said, "Everyone is waiting for tech earnings reports," describing it as "a very busy week." On the other hand, Chris Zaccarelli, Chief Investment Officer at Independent Advisors Alliance, predicted that it would be difficult for stock prices to rebound based on tech earnings, saying, "Many good news have already been priced into the stocks."

Ahead of the May Federal Open Market Committee (FOMC) meeting that sets the benchmark interest rate, the March PCE price index will also be released this week. Wall Street experts expect the core PCE to rise 4.5% year-over-year and 0.3% month-over-month. Anna Wong, an economist at Bloomberg Economics, pointed out, "If core inflation remains in the 4-6% range, a 5.25% interest rate may not be sufficient." Fed officials have entered a blackout period, refraining from public comments before the May FOMC.

According to the Chicago Mercantile Exchange (CME) FedWatch tool, the federal funds futures market currently reflects more than a 90% probability that the Fed will implement a baby step (a 0.25 percentage point rate hike) in May. The possibility of an additional baby step at the June meeting remains around 25%. The current U.S. benchmark interest rate is 4.75-5%.

Investors are also paying attention to economic indicators to be released this week amid high inflation and accumulated tightening. The Chicago Fed National Activity Index (NAI) for March, released on this day, was -0.19, unchanged from the previous month. CNBC reported, "Production and manufacturing indicators fell, while orders, inventories, and employment increased." The economic outlook for the next 12 months plunged. The first-quarter Gross Domestic Product (GDP), to be announced later this week, is expected to show growth around 2%. The U.S. Conference Board will release the Consumer Confidence Index on the 25th.

Greg Basak, CEO of AXS Investments, said, "One reason for focusing on economic data is that investors' narratives still revolve around the Fed and interest rates," adding, "The economic reports coming out over the next 7-10 days will guide what the Fed ultimately does." He also predicted that mixed economic data would continue to sustain uncertainty. Mike Wilson, Chief Equity Strategist at Morgan Stanley, warned, "The Fed seems determined to fight inflation even if it causes a more severe slowdown," cautioning that despite current earnings, the stock market could head into dangerous territory.

In the New York bond market on this day, U.S. Treasury yields fell. The 10-year U.S. Treasury yield hovered around 3.50%, and the 2-year yield, sensitive to monetary policy, was around 4.14%. The dollar index, which measures the value of the dollar against six major currencies, dropped more than 0.4% to 101.3.

International oil prices rose due to rebound buying and expectations of travel demand during China's Labor Day holiday. On the New York Mercantile Exchange, June delivery West Texas Intermediate (WTI) crude oil closed at $78.76 per barrel, up 89 cents (1.14%) from the previous session.