S&P 500 (SPY) Report – 04/29/24

Good morning, traders!

The S&P 500 ($SPY) is trading above yesterday’s close. Let’s get into it…

U.S. stock futures trade higher after recent strong performances by Alphabet and Microsoft have provided a boost to stocks, particularly after a previous downturn. Alphabet’s shares surged nearly 12% following a robust earnings report that also included a dividend announcement and a significant buyback program, while Microsoft saw a 4% increase after strong quarterly results. These gains were largely attributed to rising demand for cloud services fueled by advancements in AI technology, demonstrating the potential for substantial growth in this sector.

Meanwhile, the broader market’s outlook was influenced by mixed economic signals. Despite earlier disappointments from Meta’s forecast, the latest financial data showed positive signs, including a robust increase in the personal consumption expenditures (PCE) price index, which rose 2.8% year-over-year in March. This measure, closely monitored by the Federal Reserve for inflation trends, exceeded expectations slightly and indicated sustained price pressures, affecting market expectations for Federal Reserve interest rate cuts, now scaled back significantly from earlier in the year.

The overall market sentiment was further complicated by U.S. economic indicators pointing to a slowdown in growth alongside persistent inflation. This combination has led to a cautious approach from the Federal Reserve, with expectations of a slower pace in balance sheet reductions and potential rate cuts delayed until later in the year. These developments have significant implications for future monetary policy and market dynamics.

Despite these challenges, market indices like the S&P 500 and Nasdaq showed resilience, potentially ending a streak of losses with gains driven by strong earnings from major tech companies. This week’s market performance, supported by a majority of S&P 500 companies beating earnings expectations, underscores the critical role of corporate earnings in driving stock market movements and shaping investor sentiment amidst fluctuating economic conditions.

Friday Economic Events:
Personal Income and Outlays 8:30am ET – High Volatility Expected
Michigan Consumer Sentiment 10:00am ET
Michigan Inflation Expectations 10:00am ET
Baker Hughes Rig Count 1:00pm ET

Fed Speaker Scheduled:
Fed in Blackout Period

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