1. Moving the markets

In the financial markets, Thursday’s atmosphere was tense as stock futures took a nosedive in response to the latest economic data from the U.S. This data painted a picture of a slowing economy coupled with stubborn inflation. The trading day was characterized by significant selloffs, yet the major indexes managed to recover somewhat from the day’s lowest points.

The U.S. economy’s growth rate, as measured by the gross domestic product (GDP), was reported at a mere 1.6% for the first quarter, according to the Bureau of Economic Analysis. This figure, the lowest in two years, fell short of the 2.4% growth anticipated by economists.

The Personal Consumption Expenditures (PCE) prices, a key indicator of inflation, rose by 3.4% in the first quarter, following a 1.8% increase in the previous quarter. More strikingly, the core PCE price index—which excludes the volatile food and energy sectors—jumped to 3.7%, surpassing even the highest analyst estimates and the expected 3.4%.

These indicators have heightened concerns about ongoing inflation and cast doubt on the Federal Reserve’s ability to lower interest rates in the near future. Considering this, traders have tempered their expectations for a loosening of the Fed’s monetary policy, now predicting only one rate cut for the year.

The disappointing GDP data has added to the pressures facing a market already anxious about a downturn in technology sector earnings—a situation that some are interpreting as the onset of stagflation. Following a significant drop in Meta’s stock value, other major tech companies, collectively known as the MAG7, experienced a similar downturn but later managed to pare back some of their losses. The trajectory was echoed by the most heavily shorted stocks, with the tech sector closing slightly lower overall.

In the bond market, yields surged as inflation concerns became more pronounced, with the 2-year yield once again surpassing the 5% mark, though it failed to maintain that level at the close. Meanwhile, the U.S. dollar experienced a volatile session but ultimately ended slightly higher. Gold prices saw a rally, Bitcoin rebounded from its overnight slump with a 1.2% gain, and crude oil prices made a strong move towards the $84 mark.

Given the day’s volatility and the looming question of inflation, investors are now turning their gaze towards the upcoming earnings reports from tech giants like Google and Microsoft. With the market at a crossroads, one can’t help but wonder:

Will the earnings from these industry leaders steer the market towards recovery or further uncertainty?

1. Moving the markets

In today’s trading session, the Nasdaq experienced a burst of energy at the open, thanks to Tesla’s post-earnings jump, which propelled the tech-centric index upward. This surge was sparked by Tesla’s announcement of a strategic shift towards more budget-friendly electric vehicles, causing its stock to soar over 13%. Despite this, the initial excitement seemed to fade as the session progressed, with the Nasdaq barely maintaining its position in positive territory by the close.

Tesla’s significant rise, however, came with a caveat; the company fell short of expectations on key financial metrics for the latest quarter, casting a shadow over its impressive stock performance. This mixed outcome reflects the broader market sentiment, where uncertainty seems to be the prevailing mood.

Amidst this backdrop, over a quarter of S&P 500 companies have shared their earnings, with a promising 79% surpassing analysts’ forecasts. This robust performance has ignited a glimmer of hope among traders, suggesting that a strong earnings season could be the catalyst needed to bolster market confidence.

On the economic front, the data painted a somewhat optimistic picture. Orders for durable goods saw a significant uptick of 2.6% in March, a sharp increase from the previous month’s revised figure of 0.7%. However, the impact of this positive news was dampened by substantial downward revisions, rendering the apparent victory less consequential.

The day’s trading can best be described as chaotic and directionless. Major indexes struggled to find their footing, with the Dow notably trailing in the quest for gains. The MAG7 stocks experienced a volatile session, ultimately ending flat. Meanwhile, bond yields edged higher, the dollar saw moderate gains, and Bitcoin, despite a slight decline, managed to hold steady at the $63,000 mark.

Gold and crude oil, typically seen as safe havens, were unable to provide a respite from the market’s indecisiveness. Both commodities traded within a tight range and eventually succumbed to the same fading momentum that characterized the day’s trading.

As the dust settled, the session concluded with little to show in terms of progress, leaving market watchers to ponder the future.

One can’t help but wonder, what will be the decisive factor that either propels the markets forward or triggers a retreat from current levels of support?

Here are some headline options for this market summary:

1. Moving the markets

In today’s financial landscape, the U.S. stock market experienced a significant rally, energized by the unfolding corporate earnings season. Investors were keen to capitalize on the robust gains from the previous session, setting a positive tone for the market.

The anticipation was palpable as Tesla prepared to release its earnings report after the market closed, marking the beginning of a series of high-profile earnings announcements. Meta Platforms is expected to follow suit on Wednesday afternoon, with the tech giants Alphabet and Microsoft completing the lineup later in the week.

The earnings season has been off to a promising start, with about a fifth of the S&P 500 companies having reported by Tuesday morning. Of these, an impressive three-quarters have surpassed analysts’ expectations, suggesting a resilient corporate sector.

This upbeat trend in earnings comes as a welcome change, especially after the recent downturn in technology stocks. Names like Nvidia had suffered losses amid concerns over rising inflation and the potential for higher interest rates, but investors showed renewed confidence, engaging in strategic buying to leverage the dip in prices.

The real estate market also delivered some unexpected, good news, with new residential home sales in March accelerating at a pace that outstripped forecasts. The sales figures for single-family homes stood at 693,000 for the month, a notable increase from the revised figure of 637,000 in February and surpassing the Dow Jones estimate of 669,000.

This surge in sales led to an 8.8% gain in March, significantly higher than the anticipated 1.1%. Furthermore, the median sales price soared to $430,700, the highest it has been since the previous August, indicating a robust demand in the housing market.

The broader economic picture paints a complex yet intriguing scenario. Despite a decline in manufacturing and services data, which caused the Macro Surprise index to falter, the market interpreted this as a harbinger of potential rate cuts in 2024. This paradoxical reaction, where bad news is perceived as good news, underscores the market’s nuanced dynamics.

The previous day’s short squeeze escalated, resulting in the most substantial two-day squeeze since the end of February. The major tech stocks, collectively known as the MAG7, participated in this upward trend, although they fell short of erasing the week’s earlier losses.

In the bond market, yields fluctuated, with the 2-year yield facing resistance at the 5% threshold. The currency market saw the dollar decline, while gold experienced a minor drop. Bitcoin maintained stability at around $67,000. In the commodities market, oil prices demonstrated resilience, forming a V-shaped recovery to close above $83.

As we await Tesla’s earnings report, will it contribute positively or negatively to the current market environment?