New York Stock Market Rises Amid Earnings Season Start... US Manufacturing Sector Contracts

Tesla Earnings Release After Market Close
S&P Global Manufacturing PMI Contracts to 49.9

The three major indices of the U.S. New York stock market showed an upward trend in the early trading session on the 23rd (local time). Investor sentiment is reviving as the corporate earnings season kicks into full gear. The U.S. manufacturing sector has entered a contraction phase.

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As of 9:32 a.m. at the New York Stock Exchange (NYSE) on the day, the Dow Jones Industrial Average was up 0.26% from the previous close, trading at 38,337.94. The S&P 500, which focuses on large-cap stocks, rose 0.45% to 5,033.17, while the tech-heavy Nasdaq index climbed 0.58% to 15,541.55.

By individual stocks, U.S. automaker General Motors (GM) rose 3.66% after reporting first-quarter earnings that exceeded expectations. UPS also gained 2.28% as its earnings surpassed market forecasts. PepsiCo, despite releasing better-than-expected earnings, was down 2.53%. Apple fell 0.21% after it was revealed that iPhone sales in the Chinese smartphone market declined 19% year-over-year in the first quarter.

The market, which had been sluggish due to persistent inflation concerns and expectations of delayed interest rate cuts, has entered an earnings-driven phase aligned with this week's full-scale earnings season. Big tech earnings are the main focus. After the market closes today, Tesla will report earnings, followed by Meta on the 24th, and Microsoft (MS) and Alphabet on the 25th. Next week, Apple and Amazon will release their earnings, and Nvidia will report on the 22nd of next month. According to Bloomberg Intelligence (BI), the 'Magnificent Seven' (Nvidia, Amazon, Meta, Alphabet, Microsoft, Apple, Tesla) are expected to see a 37.5% year-over-year growth in first-quarter profits. This is expected to significantly outperform the 2.4% earnings growth forecast for all S&P 500 constituent companies.

Additionally, this week, 180 companies accounting for more than 40% of the S&P 500's market capitalization will announce their quarterly earnings.

Ayako Yoshioka, Senior Portfolio Manager at Wells Enhancement Group, said, "There is a reason for the market's short-term rebound," adding, "We have had a tough time for over a week, and now we are seeing a slight rebound in tech stocks."

Eddie Chung, Senior Strategist at Cr?dit Agricole CIB, forecasted, "Whether the market will show further strength now depends on the assessment of the sustainability of artificial intelligence (AI) demand after the earnings announcements."

The S&P Global U.S. Manufacturing Purchasing Managers' Index (PMI) for April, released on the day, recorded 49.9. A PMI above 50 indicates economic expansion, while below 50 signals contraction. This figure fell short of both the previous month's 51.9 and market expectations of 52, indicating a cooling U.S. manufacturing sector.

The market is also awaiting the preliminary first-quarter Gross Domestic Product (GDP) growth rate and the March Personal Consumption Expenditures (PCE) price index to be released this week. The first-quarter GDP, to be announced on the 25th, is expected to show 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, investors are paying close attention to the PCE price index, the Fed's preferred inflation gauge, as it will help gauge the future path of interest rates.

U.S. Treasury yields are rising. The 10-year U.S. Treasury yield, a global bond yield benchmark, increased by 2 basis points (bp) to 4.64%, while the 2-year Treasury yield, sensitive to monetary policy, rose 2 bp to 4.99%.

International oil prices are declining despite additional sanctions on Iranian crude. West Texas Intermediate (WTI) crude fell $0.37 (0.45%) to $81.53 per barrel, and Brent crude, the global oil price benchmark, dropped $0.38 (0.44%) to $86.62 per barrel.