US: Wall St climbs as strong earnings offset slowdown worries, Fed meeting in focus

US STOCK indexes advanced on Friday (Apr 28) after strong earnings updates from Exxon and Intel offset worries over Amazon’s slowdown warning, while economic data reinforced expectations that the Federal Reserve would hike interest rates next week.

Exxon Mobil Corp shares finished up 1.3 per cent after hitting an all-time high as the oil company reported a record first-quarter profit on rising oil and gas output, also boosting the S&P energy index 1.5 per cent.

Chipmaker Intel Corp gained 4 per cent after it said gross margins will improve in the second half.

Yet Amazon.com fell 4 per cent in its biggest one-day loss since early February despite better-than-expected quarterly results, as it signaled its cloud computing business growth would slow further. It weighed on the consumer discretionary index, which finished down 0.04 per cent.

After the market close, First Republic Bank tumbled 49 per cent to U$1.77 after reports the regional lender was headed for receivership. That was after the bank’s 43 per cent decline in the regular trading session.

But the benchmark S&P 500 advanced for the week as well as the day and registered a second consecutive monthly gain. It was helped by better-than-expected earnings from megacap companies including Alphabet, Microsoft and Meta Platforms.

“This week’s earnings overall were better than people expected. There was a lot of pessimism going in but the past week has brought home the fact that it’s not turning into a bad earnings season at all,” said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

He said that investors may still be cautious ahead of Apple’s results due next week and the Federal Open Market Committee (FOMC) meeting and the US jobs report for April.

The Dow Jones Industrial Average rose 272 points, or 0.8 per cent, to 34,098.16, the S&P 500 gained 34.13 points, or 0.8 per cent, to 4,169.48 and the Nasdaq Composite added 84.35 points, or 0.7 per cent, to 12,226.58.

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The CBOE volatility index, otherwise known as “Wall Street’s fear gauge”, closed down 1.25 points at 15.78, which was its lowest close since Nov. 2021.

For the month the S&P rose 1.5 per cent while the Dow added 2.5 per cent and the Nasdaq was barely higher. For the week the S&P rose 0.9 per cent in line with the Dow’s weekly gain and the Nasdaq rose 1.3 per cent.

biggest gainer was energy while the biggest decliner was Utilities, which fell 0.2 per cent.

The economically sensitive Dow Transportation index closed up 1.6 per cent for the day but lost 2.7 per cent for the week.

Analysts now expect first-quarter earnings for S&P 500 companies to fall 1.9 per cent from a year ago compared with a 5.1 per cent fall expected at the start of April, according to Refinitiv data.

John Praveen, co-CIO at Paleo Leon in Princeton, NJ said Friday’s economic data solidified expectations ahead of next week’s Fed meeting and eased fears about a sharp slowdown.

Data showed US consumer spending unchanged in March, while underlying inflation pressures remained strong, feeding expectations the Fed will hike interest rates by 25 basis points next week.

Other data showed first-quarter US economic growth slowed more than expected, while plunging consumer confidence in April heightened fears of a recession.

The Fed issued a detailed and scathing assessment of its failure to identify problems and push for fixes at Silicon Valley Bank before the US lender’s collapse, and promised tougher supervision and stricter rules for banks.

While the S&P 500 bank index closed up 1.1 per cent, shares in First Republic tumbled in the regular session and after the close. 

A person familiar with the matter told Reuters the US 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.

Snapchat-owner Snap dived 17 per cent after it warned next quarter’s results could miss Wall Street targets, while Pinterest shares sank 15.7 per cent after the image-sharing platform forecast second-quarter revenue growth below estimates.

Cloudflare tumbled 21 per cent on a downbeat revenue forecast from the cloud services provider, while Colgate-Palmolive Co climbed 2.4 per cent after lifting its annual organic sales forecast betting on consistent price hikes.

Advancing issues outnumbered declining ones on the NYSE by a 3.00-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favored advancers.

The S&P 500 posted 25 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 66 new highs and 136 new lows.

On US exchanges 11.32 billion shares changed hands compared with the 10.46 billion average for the last 20 sessions. REUTERS