To The Moon

Last Week's Recap

The US Market - The Dow wrapped up its eighth consecutive winning day

• The major averages wrapped up the quiet week on a high note. The Dow posted a 2.16% gain for the period, its best week of 2024. The S&P 500 and the Nasdaq Composite both posted a third consecutive winning week, rising 1.85% and 1.14%, respectively.

• The last time the S&P 500 was at today’s level above 5200 in late March, the 12-month forward price/earnings multiple was 21. It’s now down to 20.4 due to better reported earnings and the passage of time bringing more distant profit forecasts in the denominator.

• The 10-year Treasury closed at 4.5% this week after a quick trip to 4.7%. More tentative evidence that equities can absorb somewhat higher yields, within reason, so long as the economy is handling them and severe Treasury volatility doesn’t erupt.

The US Sectors & Stocks - The utilities continued to be the top performer

• The utilities sector continued to be the top performer, with 3.4% up. Followed by the financial sector and the industrial sector, which rose 2.67% and 2.47%, respectively.

• Utility stocks rose on AI power demand, and investors are focused on how power-hungry AI data servers will boost demand for the energy company. Constellation Energy (CEG) reported Thursday that first-quarter earnings skyrocketed 858%, with adjusted EPS up 133%, beating views. CEG rose more than 10% for the week and 80% in 2024. Another utility play is Vistra (VST), which joined the benchmark index on Wednesday. VST reported earnings and revenue declines in the first quarter. VST stock still surged nearly 15% for the week and 142.5% in 2024.

• Goldman Sachs (GS) reached an all-time high, ending the week 3.8% higher. The largest investment bank gained for the 4th straight week.

• Financial stocks such as JPMorgan Chase (JPM), American Express (AXP), and Visa (V) are among the gainers this week. All three stocks have rallied more than 4% for the week.

• Construction and mining equipment company Caterpillar (CAT) was up 5.2% in the week, leading the Dow’s weekly gains.

• Arm Holdings (ARM) and Astera Labs (ALAB), which have benefited from the artificial intelligence boom, both fell after their quarterly reports when their guidance failed to meet lofty whisper numbers.

• Uber (UBER) and Lyft (LYFT) got opposite reactions to their first-quarter earnings. Lyft reported an 87% increase in adjusted EPS with revenue up 28% and a second straight quarter of positive free cash flow. Uber reported a surprise loss due to lower values for investments. However, total bookings for rides and food delivery missed expectations.

• Shopify (SHOP) beat Q1 results, but the e-commerce software giant guided lower on Q2 revenue growth while operating expenses rose, hitting gross margins. Shares plunged.

• Rivian Automotive (RIVN) reported a worse-than-expected loss in the first quarter. Revenue grew more than 80% to $1.204 billion, but the EV startup lost more than $38,000 per vehicle delivered.

• Disney (DIS) shares tumbled after Disney+ subscribership was below the expectations, despite its Q1 revenue and EPS both beating.

Hong Kong Market - HSI rose almost 6% this month

• Hong Kong stocks advanced to eight-month highs amid optimism that China’s economic recovery is on track. The Hang Seng Index rose 2.64% to 18,963.68, registering its highest close since August 11.

• HSI has been extend its world-beating run-up from April, rising almost 6% this month, as stocks’ beaten-down valuations drive inflows and the mainland’s regulator pledged to support the offshore market by expanding the exchange link programme with the city and encouraging quality listings.

Singapore Market - Genting Singapore nearly doubles Q1 net profit

• The Singapore stock market barometer was little changed over the trading week. The benchmark STI slightly fell 0.07% to close at 3290.7 points last week.

• Singapore's second-largest bank OCBC posted a better-than-expected 5% rise in first-quarter profit and made a S$1.4 billion ($1.04 billion) offer to take its insurer arm Great Eastern private.

• Resort World Sentosa (RWS) operator Genting Singapore reported a net profit of S$247.4 million for the first quarter, a year-over-year increase of 91.5% on Chinese New Year tourism spending. The group posted a revenue increase of 61.9% to S$784.4 million from S$484.5 million a year ago.

• Microsoft bets big on South-east Asia, pledging billions in AI and cloud investments. Its chief executive Satya Nadella last week completed a three-country tour across South-east Asia, with each stop delivering big-ticket investments and upskilling initiatives.

Australian Market - The ASX200 gained three weeks in a row

• Australia’s share market ended the week on a high after gaining in four of the five trading days with energy stocks the hero, rising on the back of higher oil prices and optimism about a continuing economic recovery in China.

• The ASX 200 was up 1.6% to 7749 points, making it three weeks of consecutive gains as increased hopes for interest rate cuts in the United States this year drove the world’s biggest share market higher.

• It was a happy scene for the big banks as investors continued to digest recent profit reports with shares in Westpac (ASX: WBC) adding over 4% for the week, and ANZ (ASX: ANZ) was up 2%, followed by National Australia (ASX: NAB) and Commonwealth Bank (ASX: CBA).

The Week Ahead

Macro Factors - CPI on focus

• The latest inflation data will be this week's highlights. The April Consumer Price Index (CPI) will come out on Wednesday. Economists' consensus estimate calls for a 3.4% year-over-year increase, which would be down from the 3.5% in March. The core CPI, which excludes food and energy components, is expected to rise 3.6%, a slowdown from the 3.8% increase seen in March, according to Dow Jones.

• Morgan Stanley's economics team led by Ellen Zentner wrote in a research note that it believes inflation's descent "begins" with the April CPI report, led by easing price pressures in car insurance, rent, and healthcare.

• The consumer price index for April, which is due out Wednesday. Economists expect that retail sales increased 0.4% in April from the prior month, down from a 0.7% increase seen in March.

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Earnings：Alibaba and Tencent

• Overall, 92% of the S&P 500 has already reported, with nearly 80% of those companies beating expectations, according to FactSet. As of May 10, The S&P 500 year-over-year earnings growth rate for Q1 2024 is 5.4%. If 5.4% is the actual growth rate for the quarter, it will be better than last quarter and mark the highest year-over-year earnings growth rate reported by the index since Q2 2022 (5.8%).

• Investors will also be closely watching results from Home Depot (HD) on Tuesday and Walmart (WMT) on Thursday for signs of how the US consumer is holding up.

• Moreover, Chinese internet giants including Alibaba (BABA) and Tencent (700.HK) will also report their Q1 results on Tuesday.