THE GIST (“THE WHAT”)
Big week of earnings saw impressive quarterly results by Big Tech companies that helped reverse the week’s earlier losses that were sparked by First Republic Bank’s disappointing results that revived fears of turmoil within the banking sector. The S&P Index extended its gains into the third session fueled by stronger-than-expected results posted by marquee oil companies. The S&P Index closed the week at 4169.49, up 34.15 points for the day (0.83%).
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THE DETAILS (The “How & Why”):
Markets brushed aside the concerns around inflation, recession and debt ceiling, while cheering earnings beats by big tech and marquee oil companies. Microsoft, Meta and Alphabet sparked a rally amid tech stocks this week. Charter Communications (7.57%), Exxon Mobil (1.29%) and Mohawk Industries (7.21%) fueled the day’s gains on topping earnings estimates.
Intel Corp jumped 4.02% despite posting its worst ever drop of 36% in its revenue and biggest quarterly loss in its history. Amazon Inc, however, gave up its pre-market gains, falling 3.98% after the online retail giant indicated a deceleration in its cloud business. Snap Inc. and Pinterest Inc were other major decliners of the session amid concerns of heating ad environment, falling 17.05% and 15.56% respectively.
Concerns about the health of banking system sparked by the collapse of Silicon Valley Bank and Signature Bank remained an overhang with First Republic Bank tumbling yet another 43% to hit record lows at $3.51 amid talks that the FDIC is looking for a rescue plan for this troubled bank that could include receivership.
Meanwhile, it was a week of mixed bag of economic data that continues to point towards sticky inflationary environment and slowing consumer demand. Personal Consumption Expenditure price index came was in line with expectations, up 0.3% in March. Investors will be keenly awaiting the key CPI data releases next week with Fed’s May rate decision on Wednesday and the impact it might have on the 2-year- 10-year yield inversion.