Wall Street On Edge Ahead Of Fed Decision, Spotlight Falls On Amazon And AMD Earnings: Analyst Says Stocks Survive 'Fragility Test' As April Ends

U.S. stocks appear to be on the back foot early on Tuesday, with index futures trading modestly lower in early pre-market activity. Caution reigns supreme as traders anxiously await the Federal Reserve’s interest rate decision on Wednesday. A hawkish stance, either in the post-meeting policy statement or Fed Chair Jerome Powell’s remarks, could trigger a market pullback.  However, recent scorching inflation data has already tempered market expectations for rate cuts.

Adding to the market’s volatility, the busy earnings season commences this week. Company results and their outlooks for the future could significantly impact stock prices.

Cues From The Last Session:

Stocks closed Monday’s session on a positive note, although trading was marked by some degree of volatility. The major indices opened the session higher, as the positive momentum from Friday carried over into the new week, with Tesla, Inc. (NASDAQ:TSLA) leading from the front. They stayed above the unchanged line for the better part of the morning before reversing course in late afternoon trading.

While apprehension ahead of the week’s key earnings and data was attributed to the weakness, the stock recovered thereafter to close higher for a second straight session. Market participants also blamed the intraday slide on an increase in the U.S. Treasury’s June quarter borrowing estimates.

The gains were led by consumer discretionary stocks, while communication services stocks dragged.

Insights From Analysts:

Ahead of the Fed meeting, Wharton Professor Jeremy Siegel, Senior Economist to WisdomTree, said in his weekly commentary, that the market is currently pricing in only slim chances of rate cuts this year. On Wednesday, the economist expects Powell to repeat the rhetoric that the central bank doesn’t have enough confidence to lower rates.

Siegel expects the press to probe as to whether the Fed was contemplating rate hikes. “Powell's answer to that may be illuminating,” he said. “It is quite possible with two more inflation prints before the June meeting, that the Fed can get enough information to signal imminent cuts. I'm not ruling out a rate cut at the June meeting.”

Fundstrat expressed confidence in the market recovery taking root. “Stocks survive ‘fragility test’ of April. Roadmap for May more constructive = recovery towards S&P 5,200,” said the firm in a post on X.

Upcoming Economic Data:

• A two-day Federal Open Market Committee meeting gets underway on Tuesday, with the decision due only on Wednesday.
• The Labor Department is scheduled to release its employment cost index for the first quarter at 8:30 a.m. EDT. Economists, on average, expect the index to climb 1% quarter-over-quarter, faster than the 0.9% increase in the fourth quarter.
• The S&P Case-Shiller and Federal House Finance Agency are due to release the results of their respective house price surveys at 9 a.m. EDT.
• ISM-Chicago will release the results of its regional manufacturing survey at 9:45 a.m. EDT. The Chicago business barometer index is expected to rise from 41.4 in March to 45 in April. A reading below 50 shows contraction.
• The Conference Board’s consumer confidence index, due at 10 a.m. EDT, may have eased slightly from 104.7 in March to 103.5 in April.

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Stocks In Focus:

• F5, Inc. (NASDAQ:FFIV) fell over 9.5% in premarket trading following its earnings announcement.
• Other stocks moving on earnings are Lattice Semiconductor Corporation (NASDAQ:LSCC) (down about 4%), MicroStrategy Incorporated (NASDAQ:MSTR) (down about 5.4%), Sensata Technologies Holding plc (NYSE:ST) (up about 16%), Rambus Inc. (NASDAQ:RMBS) (down over 4%) and Yum China Holdings, Inc. (NYSE:YUMC) (down over 5%).
• Tesla slipped over 1% following its 15%+ jump on Monday.
• 3M Company (NYSE:MMM), Archer-Daniels-Midland Company (NYSE:ADM), The Coca-Cola Company (NYSE:KO), Eli Lilly and Company (NYSE:LLY), GE HealthCare Technologies Inc. (NASDAQ:GEHC), McDonald’s Corporation (NYSE:MCD), Molson Coors Beverage Company (NYSE:TAP), PayPal Holdings, Inc. (NASDAQ:PYPL) and Tenet Healthcare Corporation (NYSE:THC) are among the notable companies reporting earnings ahead of the market open.
• Notable names reporting after the close are Advanced Micro Devices, Inc. (NASDAQ:AMD), Amazon.com, Inc. (NASDAQ:AMZN), ONEOK, Inc. (NYSE:OKE), Pinterest, Inc. (NYSE:PINS), Starbucks Corporation (NASDAQ:SBUX), Skyworks Solutions, Inc. (NASDAQ:SWKS), Unum Group (NYSE:UNM). Super Micro Computer, Inc. (NASDAQ:SMCI), Stryker Corporation (NYSE:SYK), RenaissanceRe Holdings Ltd. (NYSE:RNR), Prudential Financial, Inc. (NYSE:PRU), Diamondback Energy, Inc. (NASDAQ:FANG), The Clorox Company (NYSE:CLX) and Chesapeake Energy Corporation (NASDAQ:CHK).

Commodities, Bonds, and Global Equity Markets:

Crude oil futures rose modestly on Tuesday and yet traded at the sub-$83-a-barrel mark and gold futures moved sideways around the $2,300 level.

The 10-year note yield held around the 4.628% mark.

Bitcoin (CRYPTO: BTC) has pulled back over the past 24 hours and traded under $62,000.

Asian stocks moved about in a lackluster manner before closing on a mixed note. While the Japanese market, which reopened after a public holiday, rallied strongly, Chinese equities pulled back as investors weighed in the private-sector activity data.

The Japanese yen weakened after Monday’s surge achieved on the back of government intervention to prop up the currency.

European markets were lower in early trading as investors digested a slew of domestic economic data. The euro area expanded more than expected in the first quarter, as the economy emerged out of a recession, and the March inflation came in line with forecasts.

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illustration created using artificial intelligence via MidJourney.