Following a three-week downturn, Wall Street is seeing a positive start today. Early Monday, the S&P 500 climbed by 0.5%, breaking its longest weekly losing streak since September. The Dow Jones Industrial Average surged by 165 points, and the Nasdaq composite saw a rise of 0.7%. Verizon Communications contributed to the market’s uplift with stronger-than-expected profits, countering a dip in Tesla’s stock, which announced further price reductions over the weekend. Tesla is among the nearly 150 companies in the S&P 500 scheduled to report earnings this week. Treasury yields, which spiked last week, are holding steady, adding pressure on stocks.
Investors are turning their attention to a flood of corporate earnings as they anticipate a positive kick-off to the week on Wall Street.
Early Monday, U.S. futures were up, with contracts for the S&P 500 and Dow Jones Industrial Average both showing a 0.5% increase before the opening bell.
This optimistic start contrasts with the recent gloom on Wall Street, particularly after major tech stocks suffered their worst week since the COVID crash in 2020.
Verizon saw a notable 3.6% surge after surpassing Wall Street’s profit projections, fueled by robust growth in wireless services.
Meanwhile, Tesla’s shares continued to decline after the electric car manufacturer, led by Elon Musk, announced more price cuts over the weekend. Early Monday, Tesla shares dropped by 3.3% following a reduction of roughly one-third in the price of its “Full Self-Driving” system, from $12,000 to $8,000. These cuts, implemented on Saturday, came after Tesla slashed $2,000 off the prices of three of its five models in the United States late Friday.
Tesla’s shares were trading at around $147 before Monday’s bell and have plummeted by over 40% this year. The company is scheduled to report its first-quarter earnings after markets close on Tuesday.
This week will see a flurry of earnings reports from major names including PepsiCo, General Motors, Boeing, Ford, Meta, American Airlines, and Google parent Alphabet.
Last week, tech stocks in the S&P 500 collectively lost 7.3%, marking their worst performance since March 2020, as some global giants reported disappointing trends. For instance, ASML, a Dutch semiconductor industry supplier, reported weaker-than-expected orders for the beginning of 2024.
Markets have been impacted by the realization that the Federal Reserve is likely to maintain higher interest rates for a longer duration than initially anticipated. Elevated rates negatively affect various investments, particularly those perceived as expensive and requiring prolonged growth, making tech stocks particularly vulnerable.
Fed officials are firm in their stance to await further evidence of inflation heading towards their 2% target before considering lowering the Fed’s main interest rate, which currently stands at its highest level since 2001.
Given the limited near-term support from interest rates, companies are under increased pressure to deliver profit growth.
In European trading at midday, Germany’s DAX increased by 0.6%, while the FTSE 100 rose by 1.6%. In Paris, the CAC 40 saw a 0.3% rise.
In Asian trading, Hong Kong’s Hang Seng led the region with a 1.8% gain to 16,511.69. However, the Shanghai Composite index dipped by 0.7% to 3,051.76 after the People’s Bank of China maintained its 1-year and 5-year loan prime rates unchanged.
Analysts suggest that the Chinese central bank is monitoring whether further stimulus is necessary following a faster-than-expected 5.3% annual expansion in the January-March quarter, although pockets of weakness persist in domestic demand alongside challenges in the property sector.
“The first-quarter gross domestic product (GDP) read has been promising, but pockets of weakness remain in its domestic demand alongside property sector challenges,” said Yeap Jun Rong of IG in a commentary. “Any signs of fizzling out in recovery momentum ahead could still raise calls for further cuts later this year.”
Tokyo’s Nikkei 225 added 1% to 37,438.61, while the yen weakened further. The U.S. dollar rose to 154.69 yen from 154.59 yen, trading at levels not seen since 1990.
The Kospi in South Korea surged by 1.3% to 2,629.44.
Australia’s S&P/ASX 200 also saw a strong performance, jumping by 1.1% to 7,649.20.
In the oil market, U.S. benchmark crude oil dropped by 78 cents to $81.44 per barrel in electronic trading on the New York Mercantile Exchange. Brent crude lost 81 cents to $86.48 per barrel. On Friday, Brent crude retreated to $87.29 after briefly surpassing $90 amid concerns about conflict in the Middle East.
In currency trading, the U.S. dollar slightly increased to 154.73 Japanese yen, while the euro was priced at $1.0632.
On Friday, the S&P 500 experienced a 0.9% decline, marking its third consecutive week of losses. It ended 5.5% below its late last month record, representing the longest losing streak since October when it began a rally that propelled it to a series of records this year.
The Dow Jones Industrial Average rose by 0.6%, while the Nasdaq composite fell by 2%.
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