The S&P 500 Index rose by +0.55% this morning, with the Dow Jones Industrials Index up by +0.31%, and the Nasdaq 100 Index soaring by +1.05%.
US stock indexes climbed today as strong earnings from companies like Alphabet and Microsoft boosted market sentiment. Alphabet’s shares surged over +10% after reporting Q1 revenue that exceeded expectations, while Microsoft’s stock jumped more than +2% following Q3 revenue results that surpassed consensus estimates.
Despite upbeat earnings, US economic data showing higher Mar personal spending and Mar core PCE deflator raised concerns about potential hawkish Fed policy. Nevertheless, stock indexes maintained their upward trajectory.
However, Intel faced a setback, plummeting by over -12% after issuing a weaker-than-expected forecast for Q2 revenue. Likewise, Dexcom tumbled by more than -5% due to a full-year revenue forecast below consensus.
US Mar personal spending rose by +0.8% m/m, surpassing expectations, while Mar personal income increased by +0.5% m/m, meeting forecasts.
The US Mar PCE core deflator, the Fed’s preferred inflation gauge, remained steady at +2.8% y/y, in line with Feb figures and higher than expected.
Market expectations for a -25 bp rate cut are at 3% for the upcoming FOMC meeting on April 30-May 1 and 13% for the subsequent meeting on June 11-12.
Overseas, European and Asian stock markets experienced gains, with the Euro Stoxx 50 rising by +0.83%, China’s Shanghai Composite reaching a 1-week high with a +1.17% increase, and Japan’s Nikkei Stock Index closing up by +0.81%.
Interest Rates
June 10-year T-notes climbed by +7 ticks, leading to a decline in the 10-year T-note yield by -3.5 bp to 4.669%. T-notes prices rose moderately as inflation concerns eased post the US Mar PCE core deflator release. Additionally, gains were supported by European government bond rallies following the ECB’s Mar 1-year inflation expectations decline. However, T-notes’ gains were limited due to reduced safe-haven demand amid the stock market rally.
European government bond yields declined, with the 10-year German bund yield down by -5.3 bp at 2.577% and the 10-year UK gilt yield dropping by -3.9 bp at 4.324%.
Eurozone Mar M3 money supply surged by +0.9% y/y, exceeding expectations and marking the fastest pace of increase in 10 months. ECB Mar 1-year inflation expectations eased to +3.0% from +3.1% in Feb, reaching the lowest level in over two years. However, Mar 3-year inflation expectations remained unchanged at +2.5%, higher than forecasted.
US Stock Movers
Alphabet (NASDAQ:GOOGL) soared by over +10% after reporting Q1 revenue of $67.59 billion, beating the consensus of $66.07 billion.
Microsoft (NASDAQ:MSFT) surged by more than +2% following Q3 revenue results of $61.86 billion, surpassing the consensus of $60.87 billion. Other cloud stocks like Datadog (NASDAQ:DDOG) and MongoDB (NASDAQ:MDB) also rallied.
ResMed (NYSE:RMD) climbed by more than +11% after reporting Q3 adjusted EPS of $2.13, higher than the consensus of $1.92.
Skechers USA (NYSE:SKX) rose by over +14% after reporting Q1 net sales of $2.25 billion, exceeding the consensus of $2.20 billion.
Autoliv (NYSE:ALV) increased by more than +7% after reporting Q1 adjusted EPS of $1.58, better than the consensus of $1.40.
Snap Inc (NYSE:SNAP) surged by more than +24% after reporting Q1 revenue of $1.19 billion and forecasting Q2 revenue well above expectations.
Mohawk Industries (NYSE:MHK) climbed by more than +4% after reporting Q1 net sales of $2.70 billion, surpassing the consensus of $2.64 billion.
On the downside, Intel (NASDAQ:INTC) plummeted by over -12% after forecasting Q2 revenue below expectations, while Atlassian (NASDAQ:TEAM) dropped by more than -10% following the announcement of its CEO stepping down.
In summary, while Alphabet and Microsoft’s impressive earnings fueled a stock market rally, some companies faced challenges due to weaker-than-expected forecasts. Despite mixed performances, the overall market sentiment remains positive.