Week of May 1, 2023

U.S. stocks are coming off a winning week and month.  Last Friday, the Dow gained 272 points, or 0.8%, while the S&P 500 rose 0.83%.  The NASDAQ advanced 0.69% as Big Tech earnings took center stage.  For the month, the Dow gained 2.5% to post its best monthly gain since January, while the S&P 500 gained 1.5%.  The tech-heavy NASDAQ posted only marginal gains.

Earnings reports from major tech companies dominated much of last week’s market news, fueling the conversation that earnings are faring better-than-expected despite many widespread macroeconomic concerns.  So far, a little over half of the S&P 500 companies have reported earnings, with more than 79% and about 72% surpassing earnings and sales expectations, respectively.  First quarter earnings are currently on track to fall 3.7% for the quarter, a smaller drop than the 6.7% decline projected on March 31, according to FactSet.

“There was definitely a very positive surprise on the big tech earnings,” said Jan Szilagyi, CEO of Toggle AI.  “There was a certain trepidation going into earnings season,” as expectations called for relative weakness.  Reports from many of these technology giants helped lift some market confidence, he added.

Investors anxiously await the latest rate hike decision from the Federal Reserve, due out Wednesday at the conclusion of the central bank’s policy meeting.  As of last Sunday, about 79% of traders anticipate a 25 basis point rate hike, according to CME Group’s FedWatch tool.