We have the stock market showing signs of recovery after a slow start to the month, this has been supported by positive earnings reports from key companies and stable Treasury prices.
Here is a summary of what we have in the last week. The Dow Jones Industrial Average (DJIA) increased by 0.7%. The S&P 500 saw a 2.7% rise. The Nasdaq Composite enjoyed a 4.2% gain.
All 11 sectors of the S&P 500 experienced growth, with the information technology, consumer discretionary, and communication services sectors leading the way.
Significant Stock Performance Drive Up Market
We have several mega-cap companies reporting their earnings, and these earnings has influence the market. Meta Platforms fell 7.9% following their earnings report because of questionable AI spending. On the other hand, investors react well to the earnings coming from Microsoft, $Alphabet(GOOGL)$ and Tesla, they have reported gains of 1.8%, 11.5%, and 14.4%.
If we were to look at these earnings report closely, it is actually revolving the excitement generated around artificial intelligence (AI), this has in terms benefit the semiconductor sector, evidenced by a 10% jump in the $Philadelphia Semiconductor Index(SOX)$
Market Upward Trend Reactions To Key Economic Indicators
We saw the release of the key economic reports last week which helped to contribute to the stock market's upward trend.
The Advance Q1 GDP report, indicating slower growth and higher inflation. The weekly jobless claims report, showing ongoing strength in the labor market. The March Personal Income and Spending report, revealing solid spending but no progress on inflation.
With Treasury yields showing minimal changes, this has helped investors to gain confidence in the stock market, hence, pushing it higher.
Mixed Financial sector performance
Financial sector performance was mixed, with several companies within the S&P 500 Financial Sector (XLF) reporting their quarterly results. The sector's dynamics continue to be influenced by macroeconomic factors and regulatory developments.
We will need to be careful on the financial sector, as we have some economic data coming up this week, that could further affect the financial sector.
Stock To Watch This Week
While market on Friday (26 April) ended on a high note, which was propelled by the impressive earnings of Microsoft and Alphabet. What is important to note is that the earnings reignited enthusiasm for artificial intelligence (AI).
Amazon
These tech behemoths' financial outcomes underscored their dominance in the AI sector, uplifting investor sentiment. Hence, this would bring us to focus on another earnings coming up tomorrow (30 April 2024), $Amazon.com(AMZN)$ , which is offering similar services and products, if not, more for the AI.
We should be seeing investors enthusiasm coming back for Amazon, as there might be a high possible to see a better gain, not forgetting the semiconductor sector as well.
Alibaba
Another stock we need to watch is $Alibaba(BABA)$ , they have showed their resilience and potential for recovery, by marking seventh consecutive session of gains. This has also reflected the growing investor confidence despite the company's recent performance challenges. So the stock ascent is not a surprise. I would be looking closely on this stock.
Tesla
Riding on the stock price surge even though $Tesla Motors(TSLA)$ reported a decline in revenue and earnings per share, marking its lowest EPS in ten quarters. We could see investor optimism about its future prospects.
Over the weekend, Tesla CEO visit to China has suggested that this is the market that Tesla is still looking to improve its customer base. Shanghai has always been Tesla best manufacturing output facility. I would not be surprised that Tesla low cost EV could be coming out from there. There is potential to look at Tesla now.
Intel
Intel has faced criticism for its latest weak guidance and perceived lack of progress in AI and foundry sectors. The semiconductor company's challenges highlight the competitive pressures within the tech industry, especially in the rapidly evolving AI space.
So even though we saw earnings report from big tech which supposed to help the semiconductor sector, Intel does not seem to one that is in the list.
Summary
So I personally would feel that the big tech still have room for some bullish run, and the semiconductor sector might move slightly. But with economic data and rate cut probability not possible in May or June, I would think financial sector might be one that I would avoid.
Crypto sector might do well if we do sell liquidity increase by huge margin following the rate cut decision.
Appreciate if you could share your thoughts in the comment section whether you think big tech would continue the bullish run this week with few more members of mag 7 reporting their earnings?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.
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