NEWSLETTER
Sometimes bad news is good news. It certainly seemed that way on Friday.
The Labor Department reported that job growth in April slowed from the big jump reported in March.
Investors pushed up Apple shares (AAPL) 6% on Friday and 8.3% for the week, delighted that the tech giant's second-quarter earnings report, released Thursday night, wasn't a bust.
Oil prices fell. And a key interest rate fell all week.
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A perfect recipe for a rally. And stocks rose, not just Apple. tesla (TSLA) rose 7.7% in the week. amazon.com (AMZN) added 3.7%. Main facebook Metaplatforms (GOAL) increased almost 2%.
The Standard & Poor's 500 index rose 0.6% for the week. The Nasdaq rose 1.4%, adding to the previous week's 4.2% gain. The Dow Jones Industrial Average rose 1.1%, for the third consecutive week.
For many, the weekend rally came as a pleasant surprise. The fact was that April ended with a thud, especially on Tuesday, when the major averages fell about 2% on concerns about earnings and inflation.
This bit of pessimism may be setting stocks up for a pleasant May.
The S&P 500's gain sent the index virtually back to its 50-day moving average. The Nasdaq is now above its 50-day moving average.
Breaking above the 50-day average is usually a sign of investor confidence.
Powell provokes a rally
The immediate catalyst was Federal Reserve Chairman Jerome Powell's statement at his Wednesday press conference: “The next step is unlikely to be an increase.”
Shares rose immediately after the statement and then stalled. But a new rally broke out on Thursday and continued until Friday.
Including Tesla and Apple, six of Magnificent's seven stocks showed gains for the week, although Microsoft (MSFT) rose only 0.1%. Chip giant Nvidia (NVDA) added 1.2%.
The loser was Alphabet, Google's parent company. (GOOD,) down 2.7%.
Mag 7 stocks include most of the world's richest companies, including Apple, amazon.com, Alphabet, Meta, Microsoft, Nvidia and Tesla.
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What will Neel Kashkari say?
There are no truly important economic reports coming up next week. What could grab the headlines will be speeches by several Federal Reserve officials on the prospect of interest rate cuts, inflation and the health of the U.S. economy.
The most important may come Tuesday from Neel Kashkari, president of the Federal Reserve Bank of Minneapolis.
On April 4, Kashkari predicted two rate cuts at most this year and perhaps none due to intensifying inflationary pressures. The Dow Jones fell 530 points. The S&P 500 and Nasdaq also fell.
The Dow Jones lost 5% in April, the S&P 500 fell 4.2% and the Nasdaq fell 4.3%.
Interest rates and oil decline
Adding to investors' joy at the end of the week, interest rates mostly fell. The 10-year Treasury yield fell to 4.52% on Friday from 4.58% the day before and a high of 4.72% on April 26.
That helped mortgage rates drop, with a 30-year mortgage hitting about 7.2%, down from 7.5% the week before.
But that level is still higher than the 6.6% seen in some markets in February.
Crude oil closed Friday at $78.11, its third consecutive day below $80. Crude oil has been trading above $80 since early March.
The national average gas price was $3.667 per gallon on Saturday, slightly higher so far in May. Gasoline rose 3.45% in April, but the increase was modest compared to gains of more than 6% in both March and February.
Earnings ahead for Disney, Uber, Toyota and Rivian
Much attention will be on earnings as the first quarter earnings season experiences one of its most important weeks.
The earnings season has been solid. The percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages. Data Company FactSet Reports.
One of the biggest reports of the week will be entertainment giant Walt Disney's second quarter report. (DES) , scheduled before Tuesday's opening. The expectation is that the results will be better than a year ago, but not as good as the company's first quarter results.
The earnings per share estimate is $1.09 per share, up from 93 cents a year ago.
Disney stock is up 0.8% for the week and is the top stock in the Dow this year, up 25.9%.
Disney recently fought a proxy fight from activist shareholder Nelson Peltz.
The company has been trying to reorganize to produce more successful movies and television programming, continue the success of its theme parks and, most importantly, chart a path to profitability for its Disney+ streaming operation.
Uber (UBER) which reports Wednesday, is expected to post 21 cents per share in earnings, up from 8 cents a year ago, as the ride-sharing business continues to recover from the pandemic.
Japanese automobile giant Toyota (M.T.) also reports Wednesday. The estimate for its fiscal fourth quarter is $2.91, up from $3.09. The gains from your US stocks. The company has had success in the last year with its line of hybrid vehicles in the United States. The vehicles compete favorably against Tesla and other EV-only manufacturers.
Meanwhile, Rivian Automotive's goal (RIVN) It's showing that you can really see the way forward. The company went public in November 2021 at $125 and reached $170 shortly after. It is now at $10 amid the decline of the pure EV market.
Sales are expected to reach $1.2 billion, but the consensus is that Rivian will lose $1.17 per share. It got an $827 million grant from the state of Illinois to expand its only factory. That will help conserve cash and buy the company time.
Also available this week:
Monday
- Palantir, big data analytics company (PLT) .
- Goodyear tires and rubber (G.T.) .
- Simon Property Group Real Estate Investment Trust (AAP) .
Tuesday
- Oil giant Occidental Petroleum (OXI) .
- Expedia travel company (EXPE) .
- Casino operator Wynn Resorts (WYNN) .
Wednesday
- The brewing giant Anheuser-Busch Inbev (BUDFF) .
- Fox Corp. (FOX) and (FOX) .
- New York Times Company (NOW) .
Thursday
- Dillards department store operator (DDS) .
- The hotel giant Hyatt Hotels (h) .
- Warner Bros. Discovery (W.B.D.) .
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