Wall Street’s main indexes struggled for direction on Monday as investors awaited results from megacap companies and key data that could shed light on the U.S. economy and shape the Federal Reserve’s monetary policy.
Major technology and growth companies Alphabet Inc, Microsoft Corp, Amazon.com Inc and Meta Platforms Inc, which constitute more than 14% of the value of the benchmark S&P 500, are scheduled to report results this week.
A rally in these stocks has supported Wall Street this year, and investors are waiting to see if the gains can continue amid a gloomy economic outlook.
“Not only must these companies beat, but they must also guide to a re-acceleration of EPS growth in the second quarter and beyond … that’s what the Street is looking for,” said Nicholas Colas, co-founder of DataTrek Research.
GRAPHIC : US tech stocks regain some lost ground –
U.S. stocks have largely held steady through the start of the earnings season on stronger-than-expected results from big banks, allaying concerns about a contagion from the banking crisis in March.
Coca-Cola Co gained 1% after the beverage giant beat estimates for quarterly results on resilient demand for its sodas despite multiple price increases.
Of the 90 S&P 500 companies that have reported first-quarter results so far, nearly 77% have topped analysts’ profit estimates, as per Refinitiv IBES data. The long-term average beat rate stands at 66%.
Forecasts for earnings have also improved marginally, with analysts expecting a quarterly profit contraction of 4.7% versus a 5.1% decline estimated at the start of April.
Early readings of first-quarter U.S. GDP, personal consumer expenditure index (PCE) for March, consumer confidence numbers for April are among the data scheduled for release this week.
Mixed economic numbers last week cemented bets of another 25-basis-point rate hike by the Fed in May, with money market traders pricing in a 92% chance of such a move, as per CME Group’s Fedwatch tool.
Meanwhile, U.S. House of Representatives Speaker Kevin McCarthy said the House would vote on his spending and debt bill this week amid lingering concerns that the U.S. government could hit its debt ceiling sooner than expected.
“Based mostly on history, we seem to resolve this before we have a real crisis,” said Hugh Johnson, chief economist of Hugh Johnson Economics. “But it’s not clear that the House Speaker has a good plan out there and that it’s going to be acceptable.”
At 9:37 a.m. ET, the Dow Jones Industrial Average was up 7.80 points, or 0.02%, at 33,816.76, the S&P 500 was up 3.84 points, or 0.09%, at 4,137.36, and the Nasdaq Composite was up 12.43 points, or 0.10%, at 12,084.89.
Bed Bath & Beyond Inc’s shares tumbled 26% as the home goods retailer filed for Chapter 11 bankruptcy protection after it failed to secure funds to stay afloat.
First Republic Bank gained 4.7% ahead of its quarterly report.
Advancing issues outnumbered decliners by a 1.12-to-1 ratio on the NYSE and a 1.24-to-1 ratio on the Nasdaq.
The S&P index recorded 13 new 52-week highs and no new low, while the Nasdaq recorded 31 new highs and 51 new lows.
