New York Stock Market Rises Awaiting Big Tech Earnings This Week... March PCE Inflation in Focus

Tesla, Meta, MS, Alphabet Earnings Reports This Week
Q1 GDP and March PCE Inflation Also Released

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 21st (local time). Buying momentum is gathering as investors await the earnings announcements of the 'Magnificent 7' (NVIDIA, Amazon, Meta, Alphabet, Microsoft (MS), Apple, Tesla), which kick off the earnings season this week.

As of 10 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was trading at 38,070.39, up 0.22% from the previous session. The large-cap-focused S&P 500 index rose 0.49% to 4,991.8, and the tech-heavy Nasdaq index climbed 0.72% to 15,391.88.

This week, 180 companies accounting for more than 40% of the S&P 500's market capitalization will release their quarterly earnings. Market attention is focused on the big tech earnings starting with Tesla on the 23rd. Meta will report on the 24th, followed by Microsoft (MS) and Alphabet on the 25th. Apple and Amazon are scheduled to announce earnings next week, and NVIDIA is set to report on the 22nd of next month.

Investors are watching closely to see if the market, which plunged sharply last week after Federal Reserve Chair Jerome Powell hinted at a delay in interest rate cuts amid persistent inflation, will find a rebound catalyst following the Magnificent 7's earnings announcements. According to Bloomberg Intelligence (BI), the Magnificent 7's first-quarter earnings are expected to increase by 37.5% year-over-year, significantly outperforming the 2.4% earnings growth forecast for all S&P 500 companies.

Experts believe that not only the quarterly earnings but also the future earnings outlook will influence the stock market trend.

Matt Maily, Chief Market Strategist at asset management firm Miller Tabak, said, "Earnings are now moving to the forefront," adding, "For the stock market to rally significantly, it will require many companies to exceed expectations and for earnings forecasts to be revised upward enough to raise consensus estimates for this year and next."

This week will also see the release of the preliminary first-quarter Gross Domestic Product (GDP) growth rate and the March Personal Consumption Expenditures (PCE) price index. The first-quarter GDP, to be released on the 25th, is expected to show a 2.5% growth compared to the previous quarter. The core PCE price index, due on the 26th, is forecasted to rise 2.6% year-over-year, a smaller increase compared to February's 2.8%. With the Consumer Price Index (CPI) exceeding market expectations for three consecutive months this year, the PCE price index, which the Fed closely monitors, will provide important clues about the future path of interest rates, drawing heightened market attention.

Mark Hacket, Chief Investment and Research Officer at Nationwide, said, "Geopolitical and political uncertainties have joined inflation, interest rates, and the Fed in putting pressure on the market," and predicted, "This week will be a critical period of tug-of-war between bulls and bears as earnings and the PCE price index are released."

By individual stocks, Tesla, which has cut electric vehicle prices in the U.S., China, and other markets, is down 2.5%. Chinese electric vehicle maker Li Auto is also down 6.22%, responding with price cuts and expanded subsidies.

Government bond yields are slightly higher. The U.S. 10-year Treasury yield, a global benchmark for bond yields, rose 2 basis points (1bp = 0.01 percentage points) to 4.64% compared to the previous trading day, while the 2-year Treasury yield, sensitive to monetary policy, remained around 4.97%, unchanged from the previous session.

International oil prices are down about 1%. West Texas Intermediate (WTI) crude fell $0.84 (1%) to $82.3 per barrel, and Brent crude, the global oil price benchmark, dropped $1.13 (1.3%) to $86.16 per barrel.