Wall St climbs as strong earnings offset slowdown worries, Fed meeting in focus

For a second consecutive day we’ve had a rally. Part of it is leftover exuberance from yesterday but most of it is the result of a stunning Q1 report from Exxon that has finally sealed the deal with investors that “it’s not turning into a bad earnings season at all.”  Economic data on Friday also sealed the deal on easing fears of a sharp slowdown, also reflected in the VIX registering at just under 16, its lowest in 18 months. 

The estimate for Q1 earnings took another dramatic boost to fall just 1.9% vs 2.4% yesterday, 3.9% three days ago and 5.1% a month ago.  Other news included the Fed’s scathing report of the failure of regulators to find and fix Silicon Valley Bank’s problems before its collapse.  April was a good month with the S&P gaining 1.5%, the Dow up 2.5, the Nasdaq about even. Volume was almost 1 billion shares above average coming in at about 11.3 billion. 

Fri April 28, 2023  4:03 PM

Wall St climbs as strong earnings offset slowdown worries, Fed meeting in focus

By Sinéad Carew, Sruthi Shankar and Ankika Biswas

DJ: 33,826.16  +524.29       NAS: 12,142.24  +287.89        S&P: 4,135.35  +79.36     4/27

DJ: 34,098.16  +272.00       NAS: 12,226.58  +84.35          S&P: 4,169.48  +34.13     4/28

April 28 (Reuters) - U.S. stock indexes advanced on Friday after strong earnings updates from Exxon and Intel offset worries over Amazon's slowdown warning, while economic data reinforced expectations that the Federal Reserve would hike interest rates next week. Exxon Mobil Corp (XOM.N) shares rose to all-time high as the oil company reported a record first-quarter profit on rising oil and gas output, also boosting the S&P energy index (.SPNY).  Chipmaker Intel Corp (INTC.O) gained after it said gross margins will improve in the second half.  Yet Amazon.com Inc (AMZN.O) fell despite better-than-expected quarterly results, as it signaled its cloud computing business growth would slow further. Its performance weighed on the consumer discretionary index (.SPLRCD).

"Markets are building on yesterday's gains a little bit. This week's earnings overall were better than people expected. There was a lot of pessimism going in but the past week has brought home the fact that it's not turning into a bad earnings season at all," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.  He suggested investors may still be cautious ahead of Apple Inc's (AAPL.O) results due next week and the Federal Open Market Committee (FOMC) meeting and the U.S. jobs report for April.

John Praveen, co-CIO at Paleo Leon Inc in Princeton, NJ said Friday's economic data solidified expectations ahead of next week's Fed meeting and eased fears about a sharp slowdown.  Data showed U.S. consumer spending unchanged in March, while underlying inflation pressures remained strong, feeding expectations the Fed will hike interest rates by 25 basis points next week.  Other data showed first-quarter U.S. economic growth slowed more than expected, while plunging consumer confidence in April heightened fears of a recession.

The Dow Jones Industrial Average (.DJI) rose 272 points, or 0.8%, to 34,098.16, the S&P 500 (.SPX) gained 34.13 points, or 0.83%, to 4,169.48 and the Nasdaq Composite (.IXIC) added 84.35 points, or 0.69%, to 12,226.58. 

For the month the S&P rose 1.5% while the Dow added 2.5% and the Nasdaq was barely higher. For the week the S&P rose 0.9% in line with the Dow's weekly gain and the Nasdaq rose 1.3%.  Among the S&P 500's 11 industry sectors the biggest gainer was energy (.SPNY) while the biggest decliner was Utilities (.SPLRCU), which fell 0.2%.  The economically sensitive Dow Transportation index (.DJT) closed up 1.6% for the day but lost 2.7% for the week.  The CBOE volatility index (.VIX), otherwise known as "Wall Street's fear gauge", closed down 1.25 points at 15.78, which was its lowest close since Nov. 2021.

Analysts now expect first-quarter earnings for S&P 500 companies to fall 1.9% from a year ago compared with a 5.1% fall expected at the start of April, according to Refinitiv data.

The Fed issued a detailed and scathing assessment of its failure to identify problems and push for fixes at Silicon Valley Bank before the U.S. lender's collapse, and promised tougher supervision and stricter rules for banks.  While the broader banking sector saw some gains on Friday, shares in beleaguered regional lender First Republic Bank (FRC.N) tumbled after a report it was likely headed for receivership under the U.S. Federal Deposit Insurance Corporation.

Snapchat-owner Snap Inc (SNAP.N) dived after it warned next quarter's results could miss Wall Street targets, while Pinterest Inc (PINS.N) shares sank after the image-sharing platform forecast second-quarter revenue growth below estimates.  Cloudflare Inc (NET.N) tumbled on a downbeat revenue forecast from the cloud services provider, while Colgate-Palmolive Co (CL.N) climbed after lifting its annual organic sales forecast betting on consistent price hikes. 

Advancing issues outnumbered declining ones on the NYSE by a 3.00-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favored advancers.  The S&P 500 posted 25 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 66 new highs and 136 new lows.

On U.S. exchanges 11.32 billion shares changed hands compared with the 10.46 billion average for the last 20 sessions.