On Friday, US stock markets ended on a positive note, buoyed by the resurgence of major technology stocks. Investors are closely monitoring international trade developments, adding to the market’s momentum. The S&P 500 saw a gain of 0.74%, closing at 5,525.21, while the Nasdaq Composite advanced by 1.26% to settle at 17,282.94. Meanwhile, the Dow Jones Industrial Average (DJIA) added a modest 20 points, or 0.05%, ending at 40,113.50.
Throughout the week, all three major indices displayed upward trends. This marks the second time in three weeks that they have finished positively. The S&P 500 increased by 4.6% over the week, while the Nasdaq surged by 6.7%. Although the Dow lagged behind, it still posted a 2.5% weekly gain. As it stands, the S&P 500 is down 1.5% for April, the Dow is down 4.5%, and the Nasdaq is slightly positive for the month.
Investors are gearing up for a busy upcoming period, with market movements likely to be swayed by a packed earnings calendar featuring tech giants like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Concerns over global trade policies continue to cloud market sentiment. Beyond corporate earnings, crucial macroeconomic data such as the preliminary estimate of first-quarter GDP, the monthly jobs report, and the latest PCE inflation figures could shape economic perspectives and monetary policy expectations.
Markets are keen to see if the recent uptick signals the end of equity losses linked to tariff anxieties. Deutsche Bank (NYSE:DB) strategists commented, “Regarding the employment report, our headline forecast is for a +125k increase, compared to +228k previously, with private payrolls expected to mirror this trend.” They further explained, “The signal from nonfarm payroll gains was disrupted in March and April due to weather influences and the shifting dates of Easter and school breaks.” The bank anticipates the unemployment rate will remain steady at 4.2%.
Next week, about 180 companies in the S&P 500, representing over 40% of the index’s total market capitalization, will release their earnings reports, as noted by UBS. Tech titans Apple, Microsoft, Amazon.com Inc (NASDAQ:AMZN), and Meta Platforms (NASDAQ:META) will be in the spotlight. These “Magnificent Seven” members have faced challenges maintaining their momentum into 2025 after impressive gains over the past two years.
Thus far, the earnings season has exceeded expectations, with over a third of S&P 500 companies already reporting. According to LSEG IBES data, first-quarter profits have risen 9.7% year-on-year, surpassing the 8% growth predicted at April’s start. Besides the tech giants, investors are also eyeing the earnings from ExxonMobil, Coca-Cola (IS:CCOLA), and McDonald’s (NYSE:MCD) during this busy earnings period.
Evercore ISI: “We anticipate the SPX will hover between 5,100 and 5,600 until the economy steps back from the brink. April’s Bear Market Bottom is not a ‘V’ bottom. We favor de-risked AI-driven ‘Falling Angels‘ sectors: Communication Services, Consumer Discretionary, and Information Technology. Buy stocks with low momentum and high buybacks; sell those with high momentum and low buybacks.”
RBC Capital Markets: “We track earnings sentiment by monitoring the rate of upward revisions to consensus estimates for the S&P 500. This indicator has dropped recently, reaching 33% on a four-week average. Historically, a non-crisis environment requires this to fall to around 30%, while a severe scenario sees it drop to 10-20%. If it declines further, pressure on equity prices may increase. Currently, it remains where we expect it to bottom if the worst-case scenario is avoided.”
JPMorgan: “We believe buying risk in the second half of the year is prudent, but we await hard data to align with potentially soft data, earnings projections to reset, weak guidance to pass, and tariff issues to stabilize. US bond yields and the USD remain wild cards, alongside the outlook for Fed independence and reliability.”
Morgan Stanley: “A brief rally above 5500 may continue short-term, but a sustained break above 5600-5650 depends on factors like a tariff deal with China reducing effective rates, a dovish Fed, back-end rates below 4% without recession data, and a clear rebound in earnings revisions. Until then, expect range trading to persist.”
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