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.
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.
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