Weekly: Fed Decisions; Apple Earnings; FRC to highlight the Week

US MARKET RECAP

• Last week, all the major index close in green with a deep V-shaped pattern. The blue-chip index, Dow added 0.86%, while the S&P 500 rose 0.87%. The Nasdaq advanced 1.28% as Big Tech earnings took center stage.

• For April, the Dow gained 2.48% to notch its best monthly stretch since January, while the benchmark index gained 1.46%. The tech-heavy index posted marginal gains.

• Earnings reports from major tech companies dominated much of last week’s market debate, fueling the narrative that earnings are faring better-than-feared, despite many widespread macroeconomic concerns.

• So far, a little over half of S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively. First-quarter earnings are currently on track to fall 3.7% for the period, a smaller drop than the 6.7% decline projected on March 31, according to FactSet.

• The CBOE volatility index , otherwise known as "Wall Street's fear gauge", closed at 15.78, which was its lowest close since Nov. 2021.

THE US SECTOR & STOCKS

• Of the 11 S&P 500 sectors, only four rose, led by the communication services up 2.55%, followed by a 1.2% gain in the technology sector.

• $Meta Platforms, Inc.(META)$ shares leapt more than 12% as the company reported quarterly revenue that beat analysts’ expectations. The company also issued stronger-than expected guidance for the current period.

• $Amazon.com(AMZN)$ fell 1.41% despite better-than-expected quarterly results, as it signaled its cloud computing business growth would slow further.

• $Microsoft(MSFT)$ stock surged after earnings. Its results beat expectations and featured strong growth for its Azure cloud-computing business.

• Google parent $Alphabet(GOOG)$ $Alphabet(GOOGL)$ rose 1.83% after its results beat expectations on the back of a recovery in ad sales.

• $Exxon Mobil(XOM)$ shares finished up 1.3% after hitting an all-time high last Friday, as the oil company reported a record first-quarter profit on rising oil and gas output, also boosting the S&P energy index.

• Chipmaker $Intel(INTC)$gained 4% after it said gross margins will improve in the second half, despite a near-term profit forecast that missed Wall Street estimates.

• $Snap Inc(SNAP)$ dived 17% after it warned next quarter's results could miss Wall Street targets, while Pinterest Inc shares sank 15.7% after the image-sharing platform forecast second-quarter revenue growth below estimates.

• $First Republic Bank(FRC)$ tumbled 75% to close at $3.51 in the regular trading session last week, but the shares also declined 33.6% after the close on Friday.The latest update comes after the bank reported that deposits tumbled more than 40% in the first quarter. But A rumor triggered further declines that a person familiar with the matter told Reuters the U.S. Federal Deposit Insurance Corporation (FDIC) was preparing to place First Republic under receivership imminently because there was no more time to pursue a private-sector rescue.

(Source: Finviz.com)

THIS WEEK FOCUS

• Wall Street’s anxiety over events will revolve what Powell says at his FOMC press conference at 2:30 p.m. ET Wednesday.

• It’s almost universally accepted that the Federal Reserve’s policy-setting committee will raise its benchmark fed funds rate another quarter point at the end of its two-day meeting to a range of 5%-5.25%. That decision will be released promptly at 2 p.m. Wednesday.

• The betting on Wall Street right now is that, after next week, the Fed will standpat at its next meeting six weeks later, on June 13-14. The CME FedWatch puts the odds of no change in June at 66%, but the odds of a quarter point hike to 5.25%-5.5% at 23%.

• Before the opening bell on Monday morning, however, investors are expected to have resolution on the US government's efforts to rescue troubled bank $First Republic Bank(FRC)$ .

• U.S. regulators have asked banks for their best and final takeover offers for First Republic by Sunday afternoon, in a move that authorities hope will cap a period of uncertainty for regional lenders.

• Learned from the market, $JPMorgan Chase(JPM)$ and $PNC Financial Services Group Inc(PNC)$ are likely bidders for the ailing lender. Bank of America(BAC) opted not to make a final bid after being involved in earlier discussions, according to other people with knowledge of the situation.

• Otherwise, April’s nonfarm payrolls report first thing Friday. The jobs report is expected to show 180,000 nonfarm payroll jobs were added to the US economy last month with the unemployment rate ticking slightly higher to 3.6%, according to data from Bloomberg. In March, the U.S. economy added 236,000 jobs while the unemployment rate fell.

EARNINGS

• $Apple(AAPL)$ ’s latest earnings after the stock market closes Thursday. Investors will focus on whether Apple is seeing slowdown in spending similar to what was called out by Amazon last week. Of course, with Apple set to release new VR headsets later this year, investors will inquire — what’s the AI strategy?

• The consensus among analysts surveyed by Refinitiv is that Apple’s earnings per share eased about 6% to $1.43, while revenue slipped a little more than 4% to $92.98 billion.

• Earnings season has broadly offered investors an upside surprise compared to Wall Street expectation. S&P 500 companies are beating analysts estimates at the highest rate since the fourth quarter of 2021, according to FactSet.

• With just more than half of S&P 500 companies already reporting results, 79% of companies have reported earnings above estimates. That’s above both the five- and ten-year averages.

• On the earnings front, results from AMD (AMD), Starbucks (SBUX), Ford (F), Pfizer (PFE), and Uber (UBER) will highlight the schedule.

OTHERS

• Singapore raised levies on private property purchases in a surprise move late on April 26 night to cool the market, including a doubling of stamp duties for foreigners to an eye-watering 60%.

• The Singapore government raised the Additional Buyer’s Stamp Duty to 20% from 17% for Singapore citizens buying a second home. It was increased to 30% from 25% for citizens purchasing their third or subsequent home, and for permanent residents purchasing a second residential property.

• For foreigners buying any home, the rate jumped to 60% from 30%. The increases take effect on April 27, according to the statement, which was issued by the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore.

• Home prices could rise as much as 5% in 2023 after gaining 3.2% in the first quarter, due to higher rents and favorable supply-demand dynamics, according to Bloomberg Intelligence.