To The Moon

Last Week's Recap

The US Market - All major indexes rallied after a deep pullback in April

• The major indexes started May with a winning week after a deep pullback in April. Friday's weaker-than-expected jobs report bolstered a relatively dovish Fed chief Jerome Powell on Wednesday.

• Strong quarterly reports from major Dow components also contributed to the week's rally. Particularly Apple, which is up 6% after the company announced a $110 billion share repurchase and a better-than-expected profit. Biotech stock Amgen surged nearly 12% after posting better-than-expected earnings and offering a positive update on an experimental obesity drug.

• Nonfarm payrolls report showed 175,000 jobs gained in April, below the expectations for 240,000. The unemployment rate edged up to 3.9%, versus 3.8% in the prior month. Wage figures also came in less than expected.

• The Fed on Wednesday ruled out a rate cut until the second half of the year, as Chair Jerome Powell said that restrictive monetary policy clearly needs "longer to do its job" bringing inflation back toward 2%. Yet policymakers gave the green light to cutting the pace at which the Fed is shrinking its balance sheet roughly in half to $40 billion per month. Powell also largely defused Wall Street's fears that the next interest-rate move could be higher.

• CME's FedWatch tool shows that there is a nearly 50% likelihood of a 25 basis point rate cut in September. The 10-year Treasury yield fell to 4.5%. The movement benefited rate-sensitive technology stocks.

The US Sectors & Stocks - Apple and Amgen surged

• The utilities sector rose nearly 4% to win the week's best performer sector, while the electric power stocks GE Vernova (GEV) and NextEra Energy(NEE) were up 8.6% and 6.3%, respectively.

• The U.S. Aerospace & Defense ETF (ITA) hit a record high on Friday. There are several members including Heico (HEI), Howmet Aerospace (HWM) and TransDigm (TDG) touched their most 52-week highs.

• Apple (AAPL) jumped 8.3% for the week, as the iPhone maker increased its dividend 4% to 25 cents a share and announced a $110 billion share repurchase plan.

• Amazon (AMZN) stock rose modestly. Its Q1 earnings surged 216% while revenue grew 13% to $143.3 billion, both beating. Amazon CEO Andy Jassy said generative AI was helping fuel new AWS growth.

• AMD (AMD) and Super Micro Computer (SMCI) reported strong demand for products for artificial intelligence in the March quarter. But both missed sales estimates. For the current quarter, AMD offered a roughly in-line sales outlook while Super Micro guided well above expectations for the June quarter. Both stocks sold off.

• Qualcomm (QCOM) popped 8.44% as the wireless-chip leader beat expectations for the March quarter and guided higher than views for the June quarter.

• Amgen (AMGN) popped 12% on Friday, putting the drugmaker on pace for its best daily move in nearly 15 years. Shares surged on the back of strong quarterly results and the company offered an encouraging update on its experimental obesity drug candidate.

• Weight-loss drug behemoths Eli Lilly (LLY) and Novo Nordisk (NVO) reported first-quarter earnings. Lilly earnings soared 59%, easily beating. Sales climbed 26% to $8.77 billion, slightly missing. Lilly raised full-year forecasts. Novo beat views with a 28% EPS gain with sales up 22% to $9.46 billion. Obesity drug Wegovy's sales nearly doubled to $1.34 billion but came up short.

• Tesla (TSLA) soared 15.3% on Monday, its best gain in more than three years, after reportedly winning tentative approval for introducing Full Self-Driving in China. But shares pared weekly gains as reports emerged that Musk axed Tesla's entire teams for Superchargers and new vehicles.

• Starbucks (SBUX) dived to multiyear lows after missing earnings and sales estimates and reporting a larger-than-expected traffic decline.

Hong Kong Market - HSI gained 7.39% for April

• Hong Kong stocks gained 4.67% on the week led by the technology, banking sectors. The Hang Seng Index (HSI) recorded a ninth consecutive day of gains and it's the longest winning streak since January 2018. HSI also gained 7.39% for April to register the top gainers globally in April.

• Goldman Sachs noted that overseas buying is expected to at least in the near future. China's politburo statement at the end of April "indicates a stronger commitment to a pro-growth and pro-reform policy agenda," said Jason Lui, head of APAC Equity and derivative strategy, BNP Paribas, adding the firm is upgrading their view on the MSCI China index.

• Meanwhile, UBS says global hedge funds that use an equities long-short strategy are growing increasingly bullish on China, evidenced by the heavy pick-up in their purchases of Hong Kong-listed shares.

Singapore Market - STI added 0.39%

• The Singapore stock market added 0.39% to close at 3292.93 points last week, as persistent inflation continues to weigh on concerns of higher-for-longer rates. Nio soared 30.86%.

• Political stability and trust in the government are critical for Singapore in the years ahead, Prime Minister Lee Hsien Loong said in his last major speech before handing the reins to Deputy Prime Minister Lawrence Wong.

• Yahoo is reportedly letting go of its editorial and social media teams in Singapore as it moves towards the curation of content here. The digital news publication, which uses a mix of third-party and original reporting, will be laying off some staff in Singapore.

Australian Market - ASX was up 0.7%

• The rocket under the technology sector helped to push the ASX 200 up 0.7% to close at 7,629 points, as investors overcame worries about the likelihood that official interest rates will stay higher for longer.

• Aussie market will find out whether Australia faces a similar lack of interest rate rises in the future when the new Reserve Bank (RBA) Board meets on Tuesday, with governor Michele Bullock set to hold a press conference that should indicate whether a rate rise is a possibility and whether the RBA expects inflation to return to the sweet spot target of between 2 to 3% by the end of this year.

• One of the biggest local beneficiaries of the technology boom was Afterpay owner Block (ASX: SQ2), with shares in the buy now pay later company flying up 9.8% or $10.42 to $116.44 after it reported sales and user growth that comfortably beat expectations.

• In line with the technology bounce, shares in local tech darling Pro Medicus (ASX: PME) hit a record high of $113.93 while shares in enterprise software group WiseTech Global (ASX: WTC) also rose to $92.27.

• The shares in investment bank Macquarie (ASX: MQG) which fell 2.2% to $183.83 after it revealed that profits fell 32% in financial year 2024.

The Week Ahead

Macro Factors - Does the “sell-in-May” adage still work？

• This week's economic calendar should be among the year's quietest, after a busy week. However, more growth stocks and consumer firms' results are around the corner.

• A handful of Federal Reserve officials are set to speak publicly over the next week, but Fed Chair Jerome Powell is not among them.

• Economists’ outlooks range widely on how many cuts might come this year: Citigroup sees four; Bank of America just one. However, Friday’s cool jobs report has put the potential for an interest rate cut as early as September back in play, according to the CMEGroup’s FedWatch tool.

• With the age-old “sell-in-May and go away” adage in mind, investors have wondered if the recent weakness is part of a short-term consolidation or the start of a larger downturn. But many pros note that this correction phase is normal in the context of a market that hit new all-time highs as recently as five weeks ago.

• Apple will hold a "Let Loose" spring conference on May 7, at which time Apple CEO Cook will personally announce major upgrades to the iPad Pro and iPad Air.

Read more>>

Earnings：More consumer and entertainment names

• According to FactSet, as of May 3, 80% of the companies in the S&P 500 have reported actual results for Q1 2024. Of these companies, 77% have reported actual EPS above estimates. Companies are reporting earnings that are 7.5% above estimates. Earnings growth rate for the first quarter is 5.0%. If 5.0% is the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth rate reported by the index since Q2 2022 (5.8%).

• In terms of revenues, 61% of S&P 500 companies have reported actual revenues above estimates. In aggregate, companies are reporting revenues that are 0.8% above the estimates. The blended revenue growth rate for the first quarter is 4.1% as of the date. If 4.1% is the actual revenue growth rate for the quarter, it will mark the 14th consecutive quarter of revenue growth for the index.

• And not only has this earnings season been better than expected for investors, but the typical pattern of analysts growing more cautious ahead of next quarter's earnings season hasn't held either. According to FactSet, analysts raised earnings estimates during April by 0.7%.